What’s new: U.S. private equity giant Warburg Pincus LLC is planning to take a stake in a Shanghai-based mutual fund management firm in a deal that would make it one of the latest global asset managers to expand its foothold in China’s 26 trillion yuan ($3.8 trillion) mutual fund industry.
Lombarda China Fund Management Co. Ltd. has applied for a Warburg Pincus unit to become one of its shareholders, according to a notice released by the China Securities Regulatory Commission on Feb. 3.
Lombarda China ranked 12th among domestic mutual fund managers as of the fourth quarter last year in terms of the scale of mutual funds excluding money market funds and short-term bond funds, data from the Asset Management Association of China showed. The firm oversees 371.4 billion yuan in such assets.
Warburg Pincus is one of the world’s largest private equity firms, managing more than $85 billion globally. It has launched 21 private equity funds and two real estate funds.
Read more In Depth: What’s Worrying Regulators About China’s Mutual Fund Boom
The background: If approved, the deal will mark the second time that the private equity major has tapped China’s mutual fund space. In 2017, Warburg Pincus acquired a 49% stake in Shanghai-headquartered Fortune SG Fund Management Co. Ltd. It sold 20% of the joint venture, later renamed as Hwabao WP Fund Management Co. Ltd., to state-owned Jiangsu Railway Group Co. Ltd. in 2022.
Global companies are making headway in China’s mutual fund industry, betting on the country’s recovery after a sudden U-turn on its “zero-Covid” policy. Meanwhile, the country has also sped up approval for wholly foreign-owned mutual fund managers. So far this year, Schroders PLC, JPMorgan Chase & Co. and Morgan Stanley have received the nod to set up a wholly owned mutual fund business or take full control of a joint venture in the space.
Related: China Speeds Up Approval of Wholly Foreign-Owned Fund Managers
Contact reporter Zhang Ziyu (ziyuzhang@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)
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