The Chinese Securities Regulatory Commission (CSRC) has, at long last, given HSBC Investments and Shanxi Trust and Investment a license to set up a Sino-foreign fund management joint venture.
The new company, to be named HSBC Jintrust Fund Management, will be headquartered in Shanghai and capitalized at Rmb200 million ($24.7 million). HSBC Investments will take up 49% of the equity in the new company for a consideration of Rmb98 million ($12 million). Jintrust will take the remaining 51% in the joint venture company. HSBCs consideration will be met by HSBC Group internal cash resources and injected as capital into the joint venture company.
Blair Pickerell, HSBC Investments regional CEO in Hong Kong, says the firm intends to nominate Steven Lee, who now has responsibility for developing the firms Greater China business, as the JVs president. He would not comment on other appointments, including the CIO position, other than to say the JV already has a large staff of 36. Market rumour has it that the firm wanted to tap star fund manager Sam Lau for the position, but he left to join BoCI-Prudential in Hong Kong instead.
The license to set up the JV is just the first of a series of various licenses the firm will need, but Pickerell believes these can be secured over the next few weeks, at which point the JV will be able to submit its first product application to the CSRC. He would not comment on product plans, but says the firm expects it can launch soon after the Chinese New Year holiday.
Winning this approval from the CSRC has been a long time coming for HSBC and Shanxi Trust, whose proposed JV was first rocked by the news that HSBC Bank wanted a JV instead with Bank of Communications, in which it recently took a 19.9% stake; and then by the governments decision to allow mainland commercial banks to launch their own fund JVs with foreigners, which saw three massive IPOs fast-tracked by authorities at the expense of HSBC Jintrust and others.
Shanxi Trust was established in 1985 by the Shanxi provincial government, and has assets of Rmb7.5 billion ($929 million). Market sources believe HSBC partnered with this group, small by national standards, in order to achieve effective operational control. HSBCs other China investments include an 8% stake in Bank of Shanghai, a 19.9% stake in Ping An Insurance and a JV investment with Ping An in Ping An Bank (27%), as well as the BoComm position.