Merchants Securities wins bid for Bosera stake

PUBLISHED : Friday, 28 December, 2007, 12:00am
UPDATED : Friday, 28 December, 2007, 12:00am

China Merchants Securities has won the right to buy a 48 per cent stake in Shenzhen-based Bosera Asset Management for 6.32 billion yuan as part of its strategy to expand into the mainland's burgeoning fund management industry.

Its bid that equalled 130 yuan per share was the highest in an auction held on Wednesday and the highest unit price for a fund management house in the country.

Shanxi's Haixin Group made the previous record with its purchase of Yinhua Fund Management's 21 stakes at 1.18 billion yuan or 56.2 yuan per share in October.

'The high price reflects China Merchants' ambition in expanding the country's fund management industry,' said Lee Yuk-kei, analyst at Core Pacific-Yamaichi International.

China Merchants could boost its stake in Bosera to 73 per cent from 25 per cent, becoming the fund house's largest shareholder, after getting regulatory approval.

Buoyed by the stock market boom, the Shenzhen-based brokerage's surging profit also added to its financial strength for expansion, Mr Lee said.

The brokerage reported a profit of 2.415 billion yuan in the first half but no comparison figures were provided.

The mainland's nascent fund industry is one of the fastest growing markets in the world. By the end of last year, 58 fund management companies were in operation managing 297 funds in the country. The combined net asset value is US$100 billion, more than 80 times the amount in 1998.

Bosera manages more than 250 billion yuan of assets.

Wednesday's auction was triggered by an asset sale by Bosera's largest shareholder, Kinghing Trust & Investment, which suspended all business activity after five senior officials were accused of misappropriating client funds in 2005.

China Greatwall Asset Management owns 25 per cent of Bosera and Guangsha Construction Group holds 2 per cent.