RETAIL FUNDS | Cesar Tordesillas, China

Japan's SMFG to penetrate China's mutual fund industry

Sumitomo Mitsui Financial Groupplans to acquire a minority stake in a mid-sized Chinese fund house to access China's mutual fund industry.


An SMFG unit has agreed to buy a 20 percent stake in Beijing-based China Post & Capital Fund Management Co, according to sources. The deal, which still awaits regulatory approval, is estimated by some analysts to be worth about 400 million yuan or $63.6 million.

China's mutual fund industry shrank 12 percent last year to 2.19 trillion yuan as asset managers struggled to lure investors in a stock market that slumped 22 percent amid growing economic uncertainty.

The sector, however, remains attractive to foreign asset managers who bet that China's strong economic growth and growing ranks of middle class would in the long run boost demand for wealth management services.

Of China's 66 fund management firms, more than half are Sino-foreign ventures, and the market is luring more entrants, at least nine overseas companies including Taiwan's SinoPac Financial Holdings, Korea's Mirae Asset Financial Group and UK insurer Aviva Plc have all unveiled plans to form fund ventures in the country.

If the China Post Fund deal is successful, SMFG would become the third Japanese company to invest in a Chinese fund house. Rival Mitsubishi UFJ Trust and Banking Corp and Nikko Asset Management already own Chinese fund ventures.

SMFG is buying the 20 percent stake from China Post Fund's third and smallest shareholder, Beijing Changan Group, a source said. Foreign stakes in a Chinese fund venture are capped at 49 percent.

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