J.P. Morgan Asset Management has agreed to acquire a 10% stake in CMB Wealth Management Co., an asset management subsidiary of Shenzhen-based China Merchants Bank, the two firms announced Friday.
Subject to regulatory approvals, JPMAM will make a "strategic investment" of about 2.67 billion yuan ($410.6 million) in CMB Wealth Management, expanding a partnership forged in 2019 that focused on product development and investor education, according to a joint news release.
Under the agreement, the two firms will design asset management products — including fixed income, multiasset and target-date funds — for Chinese investors.
J.P. Morgan Asset Management isn't the first to invest in the wealth management subsidiaries Chinese banks have launched in recent years. Others, pushed by regulators looking to tighten oversight, have favored taking bigger stakes in subsidiaries of those subsidiaries — or "grandson" firms.
"Rather than formulating a separate new joint venture entity with CMBWM, this strategic investment uniquely and directly connects us to accelerating our co-operation with CMBWM's already established product and distribution momentum," Dan Watkins, CEO, Asia-Pacific at J.P. Morgan Asset Management, said in the news release.
Ivan Shi, director of research at Shanghai-based investment consultant Z-Ben Advisors, said in an email J.P. Morgan Asset Management becomes the first foreign firm to invest directly in a wealth management subsidiary, getting a 10% stake in an existing bank wealth management business with more than 2 trillion yuan in assets as opposed to taking a 51% stake in a greenfield business.