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UBS and SDIC to form a funds management joint venture in China
Subject to approval by the China Securities Regulatory Commission (CSRC), UBS and the the State Development Investment Corporation (SDIC) will form a joint venture funds management company through the purchase by UBS of a 49% stake in Shenzhen-based China Dragon Fund Management Co. Ltd (China Dragon).
China Dragon will be restructured as a joint venture between SDIC Hongtai Trust & Investment Co. Ltd, a wholly-owned subsidiary of SDIC, and UBS. The application to the CSRC follows the signing of a Shareholder Agreement and a Sales & Purchase Agreement by UBS, SDIC and its affiliates.
The partners propose to use the existing China Dragon platform to launch new mutual funds and, as regulations permit, pursue discretionary investment management mandates. As market liberalization continues, the partners expect the joint venture to capture new opportunities in the Chinese investment management market.
China Dragon, currently 100%-owned by SDIC, manages RMB3.2 billion in mutual funds assets (USD386 million). Subject to CSRC approval, the joint venture will be one of the first to allow the new maximum 49% foreign partner-holding in a Chinese fund management company. The financial terms for the proposed change in ownership of China Dragon will not be released.
The partners have agreed that UBS will work with China Dragon's management to apply UBS's international experience in investment research, portfolio management, risk management, sales & marketing, operations, internal controls and compliance to the operations of the joint venture.
Mr Hongxiang SHI, SDIC's Vice President and SDIC Hongtai's Chairman said, "China's fund management industry is growing rapidly and investors are becoming increasingly sophisticated. Our partnership with an international institution of UBS's stature will serve to introduce international best practices to the joint venture. SDIC is confident that working together with UBS, the joint venture will quickly become one of the leading asset management companies in China."
"China is a key strategic market for all of UBS. This is an important step in our strategy to build a major presence in China's asset management industry as market liberalization continues," said John FRASER, Chairman and Chief Executive Officer of UBS Global Asset Management.
"With its expertise in the successful operation of Chinese financial services assets, SDIC is the ideal partner for us (SDIC was recognized in 2004 by the China Enterprise Confederation as one of the ten most influential enterprises in China). Our partnership creates a platform of the perfect scale from which both our organizations can realize their ambitions in Chinese asset management," said Christof KUTSCHER, Head of UBS Global Asset Management - Asia Pacific.
"China Dragon welcomes the stability and strong governance that our proposed new shareholder structure will provide. Each of the partners offers a wealth of experience in China and around the world, which will enhance our ability to meet the needs of our existing clients, and capture the growing opportunities in China," said Chaoling WAN, General Manager of China Dragon.
Shenzhen, 11 January 2005
For further information
Ms Donna Chan
+852 2971 8792
+852 9312 1311
Mr Matthew McGarth
+852 2971 8200
+852 9235 0166
Ms Wang Bin
+86 10 6809 6686
UBS is one of the world's leading financial firms, combining financial strength with a reputation for innovation and a global culture that embraces change.
UBS is the world's largest wealth manager, a premier investment banking and securities firm, and one of the largest global asset managers. In Switzerland, UBS is the market leader in retail and commercial banking. UBS, headquartered in Zurich and Basel, employs around 66,000 people, and has operations in over 50 countries and in all major financial centres.
UBS Global Asset Management is one of the world's leading asset managers, providing traditional and alternative investment management solutions to private clients, financial intermediaries and institutional investors worldwide. Invested assets totalled some CHF 600 billion at 30 September 2004, making us one of the largest global institutional asset managers, the second largest mutual fund manager in Europe and the largest mutual fund manager in Switzerland.
With around 2,600 employees, of whom some 630 are investment professionals, located in 21 countries, UBS Global Asset Management is a truly global firm. Our main offices are in Chicago, London, New York, Tokyo and Zurich.
State Development & Investment Corp (SDIC), a state-owned investment holding company regulated by The State Council's State-owned Assets Supervision & Administration Commission, was established in May 1995 with registered capital of RMB5.8 billion (USD701 million). China's largest investment holding company's investments are primarily in the power, coal, ports, financial, asset management, high tech and consultation services sectors. SDIC was named one of the 10 most influential enterprises in China in 2004 by China Enterprise Confederation.
China Dragon Fund Management Co Ltd (China Dragon), headquartered in Shenzhen, was founded by five domestic investment trust and securities companies in June 2002. China Dragon Fund Management currently manages three funds, including a closed-end fund, an open-end bond fund and an open-end balanced fund, with approximately RMB3.2 billion (USD386 million) in assets under management.
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