Warburg Pincus to buy stake in Chinese mutual fund business
Warburg Pincus is set to acquire Société Générale's (SocGen) 49% interest in Fortune SG Asset Management, a Sino-foreign mutual fund joint venture with China’s Baosteel Group.
The investment has already received regulatory approval by the China Securities Regulatory Commission. It means Warburg Pincus - which will invest through its affiliate Warburg Pincus Asset Management - will become the first global private equity firm to gain exposure to the country's mutual fund industry.
Fortune SG was one of the first Sino-foreign fund JVs, launching in 2003. Its product offering includes domestic public equity funds, overseas investment funds, and wealth management services. The company claims to be the leading exchange-traded products (ETPs) manager in China. Its flagship ETP – Fortune More Gains – is the largest fund on both the Shanghai and Shenzhen stock exchanges. As of June, Fortune SG had RMB122.5 billion ($18.2 billion) in total assets.
“With the rapid growth of the Chinese economy and accumulation of family wealth in the past 30 years, people have become increasingly aware of the importance of wealth management and asset allocation. We are strong believers in the long-term prospects of China’s asset management industry and public fund management industry,” Ben Zhou, a managing director at Warburg Pincus, said in a statement. “Our strategic investment into Fortune SG marks a significant move for Warburg Pincus into China’s asset management industry.”
Warburg Pincus said it will offer its resources and expertise to Fortune SG across strategic planning, product development, and financial technology, with a view to helping the company build a stronger wealth management platform with diversified products.
The private equity firm closed its first dedicated China fund at the hard cap of $2 billion in December last year. The fund invests in China deals alongside Warburg Pincus' $13.4 billion global flagship vehicle, which was closed in 2015.
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