MUFG Plans to Acquire BNP Stake in Chinese Fund for $50M

The Mitsubishi UFJ Financial Group planned to buy BNP Paribas‘ stake in a Chinese fund venture for $50 million, according to Reuters.

The acquisition would give Japan’s biggest bank access to China’s $300 billion mutual funds market.

The two banks will submit plans involving the SYWG BNP Paribas Asset Management Company stake to the securities regulator in China for approval this month.

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.

MUFG secured the deal after outbidding about a dozen competitors including Japan's Nomura Holdings Inc and Ashmore Group, which is based out of London.

SYWG BNP Paribas was formed in 2004 between BNP Paribas and Chinese brokerage Shenyin & Wangguo Securities Co, which controls a 67 percent stake.

The 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 decrease 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.