Cathay Financial Holding Co (國泰金控) shares rallied 4.66 percent yesterday after the nation’s largest financial services provider said its board had agreed to form a joint venture in Hong Kong with Conning Holdings Corp of the US to tap opportunities in institutional asset management services in the Asia-Pacific region.
Cathay Financial shares closed at NT$43.8 yesterday, ending a four-day losing streak. Local rival Fubon Financial Holding Co (富邦金控) shares rose 2.36 percent to NT$43.45.
The new asset management company would have a paid-in capital of US$6 million, with Cathay Financial and Conning Holdings each holding a 50 percent stake in the venture, the Taipei-based financial services provider said in a stock exchange filing on Tuesday.
The venture would target markets including Taiwan, China, Hong Kong, South Korea, Japan and Vietnam, while developing investment products that can be distributed globally, the firm said.
Conning Holdings, headquartered in Hartford, Connecticut, is one of the largest global asset managers focused on the insurance industry. It currently manages assets for Cathay Financial’s life insurance unit, Cathay Life Insurance Co (國泰人壽).
Apart from the plan to set up the joint venture, Cathay Financial’s board also agreed to purchase 100,695 shares in Conning Holdings at US$186.84 a share, US$18.81 million in total, which would give it a 9.9 percent stake in the global asset manager, according to a separate exchange filing on Tuesday.
While the deal only gives Cathay Financial a minority stake in Conning Holdings, it is expected to help expand the company’s operational scope and expand its overseas asset management business and make it more competitive, the filing said.
“We are very excited about our strategic partnership with Conning,” Cathay Financial president Lee Chang-ken (李長庚) said in a statement. “This partnership, including the establishment of a Hong Kong joint venture and an investment in Conning, is an important strategic transaction for Cathay Financial Holdings as we look to further strengthen our asset management capabilities and expand our presence in the asset management industry in the Asia-Pacific region.”
Cathay Financial said it would apply with the Financial Supervisory Commission for permission to launch the Hong Kong asset management venture and to purchase the Conning Holdings shares. It expects to close the deal in the first quarter of next year.
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