JPMorgan Chase will have to pay a big premium to become the first foreign company to fully own a mutual fund business in China, as reforms to the country’s growing investment industry encourage a wave of interest from the world’s biggest financial businesses, reported the Financial Times.
The New York-based banking group would have to pay RMB 7 billion ($1 billion) to buy the remaining 49% of China International Fund Management (CIFM), according to a statement released on Tuesday on the Shanghai United Assets and Equity Exchange.
That price represents a premium of more than 50% compared with a recent valuation of the company, which JPMorgan said earlier this year it would look to fully consolidate.
“This is expensive, there’s no doubt,” said Peter Alexander, founder at Z-Ben Advisors, a Shanghai-based fund consultancy. He noted that it would mark the first full buyout by a foreign company of a “pre-existing and scalable fund management platform”.