HSBC‘s is “open to opportunities to expand its businesses” in China after its local partner put a 31% stake in a joint venture on the block, the bank said on Tuesday.
The auction of a stake in HSBC Jintrust Fund Management comes after sources told Reuters in May that Europe’s largest bank was seeking to boost ownership and expand its presence in the asset management market of the world’s second-largest economy.
Chinese state-owned Shanxi Trust, which owns 51% stake in the joint venture, is auctioning off the partial ownership with an asking price of 1 billion yuan ($138.27 million), a webpage from China‘s National Public Resource Trading Platform shows.
The China fund unit is valued at 3.2 billion yuan, Reuters calculations based on the asking price show.
The valuation is in line with how the other foreign managers priced their deals over the past few years since China removed foreign ownership cap in 2019, according to fund consultancy Z-Ben Advisors.
The auction started to receive bids on Thursday last week. China Fund News first reported the stake auction late on Monday.
“We are keen to grow our businesses in China, including our fund management JV HSBC JinTrust, which is a strong, profitable business,” HSBC said in a statement responding to a Reuters’ query on whether it was considering buying the auctioned shares.
“The Group is open to opportunities to expand its businesses at the right moment and that are aligned to its strategic growth plans,” it added.
HSBC Jintrust declined to comment. Shanxi Trust did not immediately respond to a Reuters’ request for comment.
HSBC, which currently owns 49% of the fund unit enjoys a preemptive right to purchase the share, according to the auction page. The bank has not given up the opportunity to exercise the right. Preemptive right allows an existing shareholder to be the first one to refuse auctioned shares.
Two sources with knowledge of the matter said in May HSBC planed to buy out Shanxi Trust.
It’s possible the local partner of the bank decided to go through a “phased sell off”, said Peter Alexander, managing director of Z-Ben Advisors.
Or it could be a strategic choice for HSBC, which may want to maintain connection with a local “comrade” eventually, he added.
HSBC is the latest among a slew of global financial firms, following Manulife, JP Morgan and Morgan Stanley, to boost their presence in China‘s asset management market.
Reuters