Everbright Securities, controlled by conglomerate China Everbright Group, is divesting its stakes in two domestic fund managers, ostensibly to focus on a proposed fund management joint venture with United States-based Prudential Financial.
The tender of its 25 per cent stakes in Da Cheng Fund Management and Boshi Fund Management, each costing it 25 million yuan (about HK$23.43 million), will also make way for a new domestic fund manager, said an Everbright Securities official.
Analysts, however, see the sale as the Shanghai-based brokerage's attempt to cash in before domestic and foreign competition ushers fund managers into a low-margin era.
The sale, announced towards the end of the year, may bring relief to Everbright Securities' bottom line in the depth of a domestic stock market slump.
Six-year-old Everbright Securities has an application pending before the China Securities Regulatory Commission (CSRC) for a joint-venture fund manager with Prudential Financial. Four such joint ventures have been approved so far. Mainland rules restrict domestic brokerages to stakes in one Sino-foreign fund management joint venture and one domestic fund manager simultaneously.
Everbright Securities hoped to tender off its Da Cheng holding to a domestic brokerage or trust firm by the end of the year, followed by the Boshi stake sale, said the Everbright Securities official.
Analysts say the stakes will easily find takers. Three-year-old Da Cheng and four-year-old Boshi, each with four shareholders with equal holdings and more than 10 billion yuan under management in five closed-end funds and one open-end fund, are among China's 10 oldest fund managers.
