The fund management arm of Cathay Financial Holding Co (國泰金控) yesterday announced plans to form a joint venture with a Chinese peer in Beijing, in an attempt to capitalize on the fast--growing asset management market in China.
Cathay Securities Investment Trust Co’s (國泰投信) board approved the plan to team with China Development Bank Securities (國開證券), a subsidiary of China’s state-owned China Development Bank (CDB, 國家開發銀行), to create a money management venture.
The planned fund manager, which still needs approval from financial regulators on both sides of the Taiwan Strait, would have capital of 200 million yuan (US$30.9 million), with Cathay Investment Trust taking a 33.3 percent stake and the Chinese partner taking the remaining 66.7 percent, the Taipei-based firm said.
The joint venture plan comes after the group, Taiwan’s largest financial firm by assets, pledged last week to make asset management its third primary revenue driver, behind its banking and insurance businesses.
On Wednesday, the conglomerate struck a deal with Conning Holdings Corp of the US to establish an asset management company in Hong Kong to seek opportunities in institutional asset management services in the Asia-Pacific region.
Cathay Financial vice president David Sun (孫至德) said yesterday the group was upbeat about business opportunities in the asset management industry and it planned to expand its presence in Asia, the US and Europe.
The cross-strait joint venture would allow Cathay Financial to cash in on the growing demand for professional asset management services that target both institutional and private investors, Sun said.
China’s booming economy and the rapid increase in the size of trust funds bodes well for the new venture, he added.
The planned asset management company would be the first joint venture between a Taiwanese fund manager and CDB.
CDB, created in 1994 to provide financing for national projects such as infrastructure, basic industries, energy and transportation, is under the direct jurisdiction of the Chinese State Council and has 34 branches and two representative offices throughout the country, Cathay Financial said.
CDB’s securities arm is the only brokerage completely controlled by a lender and it aims to provide full services and innovative products to its customers, making it an ideal partner, Cathay Financial said.
As the foreign exchange rate continued to weaken Cathay Financial’s life insurance unit’s earnings, it saw its shares close down 0.56 percent at NT$44.20 yesterday, underperforming the TAIEX’s 0.4 percent gain.
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