US financial services group JP Morgan has confirmed that talks between its unit JF Funds and Chinese fund manager Huaan to establish a joint venture fund management company have broken down, the Financial Times said. Insiders said that the two sides had agreed on the new management structure and the price that JF would pay for its stake in the venture, points that have proved very difficult in negotiations between other foreign companies and Chinese fund managers. Instead, the company attributed the impasse to unspecified 'operational issues'.
JF was the first overseas company to win approval to help run an experimental USstyle mutual fund in China in 2001. However, China-based executives have said that JP Morgan seemingly lost interest in the venture late last year and several senior JF executives have left the fund in recent months, apparently in frustration at the slow pace of negotiations. A JP Morgan spokesperson in Hong Kong said that JF was in talks with other potential Chinese partners to establish a joint venture on the mainland.
Although at least five foreign companies have received the go-ahead to operate joint venture funds in China only one, the partnership between ABN Amro Asset Management and Xiangcai Hefeng Fund Management, has matched a local fund manager with a foreign company. The other joint venture businesses that will be establishing new funds involve foreign companies and Chinese banks or securities companies.