Warburg Pincus is moving closer to buying a stake in Zhong Ou Asset Management Co from Intesa Sanpaolo, according to exchange filings and a source, underscoring the U.S. private equity giant’s unabated interest in China’s $3.8 trillion mutual fund industry.
Italian banking group Intesa Sanpaolo disclosed in its 2021 annual report that its board had approved the sale of a 23.3% stake in Zhong Ou to Warbug Pincus. It said in the report the stake was held by former UBI Banca, which Intesa Sanpaolo took over in 2020.
The planned 23.3% stake sale to Warburg Pincus was confirmed on Monday by a source familiar with the transaction.
Zhong Ou has received regulatory feedback to its application for a shareholder change involving a stake sale to Warburg Pincus, according to a disclosure by the China Securities Regulatory Commission (CSRC) over the weekend.
The CSRC did not say how big a stake Warburg Pincus will buy in Zhong Ou, which has more than 350 billion yuan ($51.3 billion) of assets under management (AUM).
Warburg Pincus declined to comment and Intesa did not immediately respond to a Reuters request for comment.
The development comes as the CSRC speeds up application approvals for foreign financial institutions, having recently allowed Morgan Stanley, JPMorgan and Manulife Financial Corp to buy full ownership of their Chinese mutual fund ventures.
In the regulatory feedback, the CSRC asked Warburg Pincus to explain how it would support Zhong Ou’s development. The regulator also requested further proof from Warburg Pincus that it’s a leading global player with good international reputation and performance.
Once approved, the transaction would represent the second investment deal in a Chinese mutual fund by Warburg Pincus, which currently owns a 29% stake in Hwabao WP Fund Management Co.
Warburg Pincus has been actively investing in China’s real estate and healthcare industries, having invested more than $15 billion in over 150 Chinese companies since its entry into China in 1994.
Reuters