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SCMP Reporter

As ABN Amro toasts its new fund management partners in Beijing, a similar JF Funds joint venture has been pronounced dead in the water.

JF Funds, under JP Morgan Fleming Asset Management, said talks to buy 33 per cent of Shanghai-based Huaan Fund Management from its existing shareholders had been 'put on hold'.

An official at Huaan, among the best run mainland fund managers, confirmed the talks 'have stalled'.

'We greatly regret not being able to reach a deal . . . despite significant concessions on both sides,' she said indicating Huaan would continue to pursue all kinds of co-operation with foreign players.

Those were the clearest official indications that the two-year courtship, once thought to be the mainland's first fund joint venture, would come to nothing.

A source said the foreign side pulled the plug on the talks, with the differences of opinion centred on the joint venture's future operations and management control.

All five of the Sino-foreign fund joint-venture agreements approved by the China Securities Regulatory Commission involved firms to be set up from the start.

Industry experts have predicted negotiations with multiple domestic partners to buy a stake in an existing mainland fund manager would be difficult, with talks complicated by valuation and management-control issues.

Huaan is owned by Shanghai International Trust and Investment and four mainland brokerages.

In August 2000, JF Funds became the first foreign investor to sign a technical co-operation agreement with a mainland fund manager. In July 2001 it blossomed into a joint venture memorandum with Huaan.

JF Funds advised Huaan on the August 2001 launch of China's first open-ended fund.

Market sources said the leading regional fund manager's new United States shareholders - Chase Manhattan Bank bought Jardine Fleming and then JP Morgan - were preoccupied with cutting costs globally and wary of sinking time and effort into a market marred by poor corporate governance, with profits years away.



MUCH TRUMPETED JF FUNDS-HUAAN MAINLAND VENTURE RUNS OUT OF STEAM