Mitsubishi UFJ Financial Group (MUFG) <8306.T> plans to buy BNP Paribas'
The French bank and MUFG will submit plans involving the SYWG BNP Paribas Asset Management Co stake to China's securities regulator for approval this month, after a previous application was rejected due to minor technical issues, one of the sources said. The sources declined to be identified as they are not authorized to speak to the media.
After the sale, BNP Paribas would own only one fund license in China, enabling it to comply with Chinese rules that bar a foreign company from owning more than one fund venture. The deal would also allow MUFG to tap China's fast-rising demand for asset-management services.
China's mutual funds market is nascent but rapidly-growing as people get increasingly wealthy, said Wu Xianxing, analyst at Haitong Securities Co in Shanghai. Deregulation is the big trend, so it makes sense for foreign companies to set up a foothold in this market.
MUFG secured the deal after outbidding about a dozen rivals including Japan's Nomura Holdings Inc <8604.T> and London-based Ashmore Group
China's mutual fund assets totaled 2.1 trillion yuan ($310 billion) by the end of June, and the industry may triple in size to exceed $1 trillion over the next five years, according to Shanghai-based fund consultancy Z-Ben Advisors.
More than 30 foreign institutions, including JPMorgan
SYWG BNP Paribas was formed in 2004 between BNP Paribas and Chinese brokerage Shenyin & Wangguo Securities Co, which controls a 67 percent stake.
The Shanghai-based fund venture has 10.4 billion yuan of assets under management (AUM) at the end of June, representing a 0.49 percent market share, a slump from its 0.9 percent market share at the end of 2009.
MUFG's purchase price of $50 million for a 33 percent stake represents a price/AUM ratio of about 10 percent, compared with a typical valuation of 5 percent, making the offer very attractive.
For BNP Paribas, this is an irresistible offer, said a source. The valuation is much higher than normal.
BNP Paribas took over Fortis
BNP Paribas sold its 49 percent stake in China's ABN AMRO last November to Canada's biggest life insurer Manulife Financial Corp
The planned sale of ownership in SYWG BNP Paribas will leave the French bank with one fund venture in China -- Fortis Haitong, which manages about 40 billion yuan, representing a 2 percent market share. ($1=6.77 Yuan)
(Reporting by Samuel Shen, Helen Ding and Jacqueline Wong)