JPMAM wins auction for 2% Shanghai JV stake, clearing hurdle for control

J.P. Morgan Asset Management Tuesday confirmed it has won an auction to purchase an additional 2% equity stake in Shanghai-based China International Fund Management from joint venture partner Shanghai International Trust Co., clearing its way to become the first foreign firm to take a controlling 51% stake in a mainland-based fund management company.

Having won the auction required for sales of interests in state-owned enterprises, JPMAM officials are working closely with SITCO and “looking forward to the next steps to proceed with this acquisition,” said Dan Watkins, JPMAM’s Hong Kong-based Asia Pacific CEO, in a statement issued by the company.

The auction — conducted on the Shanghai United Assets and Equity Exchange — resulted in a price of 241.3 million yuan ($34.8 million) for the 2% CIFM stake, a 33% premium to the roughly $1.3 billion valuation for the joint venture cited by information previously released on the exchange, valuing the firm at roughly $1.8 billion.

The deal is contingent on the approval of regulators in the U.S. and China.

A spokeswoman declined to speculate as to how long it could take before the deal is finalized or whether the latest flare-up of U.S.-China trade tensions could impact the timing.

“We have a fundamentally long-term approach to China and our increased involvement with CIFM, a cornerstone of our onshore presence for nearly 15 years, advances our strategic plans,” the spokeswoman said.

As of March 31, China International Fund Management managed 150 billion yuan in mutual fund and separate account assets.