Quick sale tipped for ING's stake in fund house

PUBLISHED : Monday, 18 June, 2012, 12:00am
UPDATED : Monday, 18 June, 2012, 12:00am


ING Group, which is looking to sell its Asian asset management and insurance businesses, has drawn keen interest from a clutch of bidders for its one-third stake in a mainland joint-venture fund house, industry sources say.

At least 10 foreign investors, including Australia's Macquarie financial group, and Richard Li Tzar-kai, the younger son of Asia's richest man Li Ka-shing, have shown an interest in acquiring ING's stake in China Merchants Fund Management, which is expected to be valued at around US$200 million, according to two people informed about the bidding process.

The Dutch financial firm is putting its insurance assets and asset management businesses in Asia under the hammer, and will use the proceeds to repay part of the aid it received from its government during the 2008 financial crisis.

Sources said its 33.3 per cent share of the mainland fund manager was sure to attract bidders and secure a quick sale, since foreign investors were scrambling to get access to China's lucrative securities sector.

'China Merchants Fund Management is viewed as a strong player in the country's asset management industry,' one source said. 'Since a joint-venture fund management licence is seen as a rare resource, the sale of the stake provides a chance for foreign investors interested in gaining a mainland foothold.'

A written media query to ING Asset Management, which directly holds the stake, went unanswered last night.

ING set up the fund management firm with China Merchants Bank and China Merchants Securities at the end of 2002, with each party holding a third of the venture. Based on the registered capital of 2.1 billion yuan (HK$2.57 billion), ING could book a one-off gain of about 20 times via the stake sale.

An ownership change in the fund house will be subject to approval by the China Securities Regulatory Commission. A foreign investor can hold up to 49 per cent of a joint-venture local fund house, according to present regulatory rules.

The mainland's asset management firms have flourished since 2006 as retail investors have flocked to buy shares of mutual funds.

The top-tier fund houses have become highly profitable by raking in massive management fees, though their smaller rivals are struggling to survive the fierce competition.

About a quarter of the roughly 60 fund houses on the mainland made losses last year amid a bearish market and rising labour costs.

But initial investors of the larger fund houses have already made big gains by selling their stakes.

'Overall, the asset management industry is still a promising sector, given the expected fast growth of China's capital market,' Howhow Zhang, chief researcher at Shanghai-based financial advisory firm Z-Ben Advisors, said. 'Owing part of a local joint-venture fund house is a ticket to tapping the huge growth potential in the future.'