by millionairemind » Fri Jun 13, 2008 11:10 am
Published June 13, 2008
UOB, Ping An to set up fund mgt venture: report
UOB says tie-up with Ping An Securities pending regulatory approval
PING An Insurance (Group) Co of China Ltd, China's second largest life insurer, has won approval to set up a fund management joint venture with United Overseas Bank (UOB), two people with direct knowledge of the situation told Reuters yesterday.
However, Singapore-based UOB clarified last night that 'an application for regulatory approval has been submitted for UOB to set up with Ping An Securities Company Limited a 25:75 joint-venture company to carry out fund management business' in China. Ping An Securities is part of the Ping An Insurance (Group)
UOB added that 'such regulatory approval is still pending'.
According to Reuters, the move came after Ping An failed early last year to buy control of domestic fund house Jutian, in which Morgan Stanley and its local partner China Fortune Securities won Beijing's nod to invest in and restructure last month.
The joint venture, to be controlled by Ping An Securities, the brokerage arm of the Ping An group, will be based in Shenzhen, and UOB, Singapore's second-biggest bank by assets, will have the right to appoint some key positions in the new firm, the sources told Reuters.
The negotiations between Ping An Securities and UOB Asset Management were held for nearly a year before they reached an agreement early this year, the sources said.
Ping An, also based in Shenzhen, has begun to hire staff for many areas including marketing, auditing and risk management for the new firm, as part of its preparations to launch the fund venture, said the sources, who asked not to be named because they are not authorised to speak to the media.
'The regulator has given Ping An the nod to prepare for launching the firm. Once completed, it will have to seek a final approval from the regulator again to officially announce the launch of the firm,' said one of the sources.
'But they should have no problem to get final approval as long as they can complete the preparatory work successfully.' The fund venture between Ping An and UOB will target domestic investors, and it has no relation to the partnership between Ping An and Fortis, the sources said.
In March, Ping An agreed to pay 2.15 billion euros (S$4.6 billion) for half of Fortis' investment management business, which Ping An said would help it expand into global asset management markets. Ping An also holds a roughly 5 per cent stake in the Dutch-Belgian financial services firm.
Foreign banks such as HSBC Holdings plc and JPMorgan have also set up fund ventures in China, although overseas investors cannot own a controlling stake under current rules.
About half of China's 60 fund houses are joint ventures.
An approval for the establishment of the Ping An/UOB fund venture will make Ping An China's first insurer to have a fund arm, though indirectly.
Currently, Chinese insurers are not allowed to directly control a fund company, although Ping An and its rivals including China Life Insurance Co Ltd and China Pacific Insurance Co Ltd have been lobbying Beijing for a long time to lift the restriction.
Ping An's success in winning approval for a fund venture may signal that China Life and China Pacific can pursue similar plans to sell mutual fund products to their existing insurance clients.
On Tuesday, Dai Xianglong, chairman of the National Social Security Fund, told a financial forum in Tianjin that China needs to accelerate the approval of fund management joint ventures so that more overseas professionals will come to help develop the country's young but robust wealth management market. -- Reuters
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