China

Guotai Junan to Sell Its Stake in Guotai-Allianz Fund for RMB 1.05 Bln

Summary:

  • Leading Chinese securities firm Guotai Junan (601211.SS) plans to sell its controlling 51% stake in Guotai-Allianz Fund for RMB 1.05 billion, according to Securities Times.
  • The deal still requires the approval of the China Securities Regulatory Commission (CSRC).

Why It Matters:

  • The Guotai-Allianz Fund is the first mutual fund founded by foreign financial institutions in conjunction with local firms. Guotai Junan took a controlling 51% stake and the Allianz Group holds a 49% stake.
  • The performance of the mutual fund has been very poor. By 2016, assets under management (AUM) were RMB 41.1 billion, placing the fund at 50+ in the Chinese mutual fund industry. During the first half of 2016, the fund generated revenue of only RMB 251 million, and it earned a net profit of only RMB 77 million.
  • Guotai Junan’s decision does not indicate if it plans to quit the mutual fund industry. The company has just acquired a 20% stake in the Huaan Fund, which ranks 16th in terms of AUM at RMB 163 billion. Guotai Junan plans to further increase its stake to 40% in the near future.