Sumitomo Mitsui Financial Group will buy a 24 percent stake in a mid-sized Chinese asset management firm for around $125 million, two sources with direct knowledge of the matter said, a move that would be its first foray in China's wealth management market.
Foreign asset managers are betting China's strong economic growth and growing ranks of middle class will in the long run boost demand for wealth management services. The nation's mutual fund industry, however, shrank 12 percent last year amid a stock market slump.
Sumitomo Mitsui Banking Corp, a core unit of Japan's third-largest lender by assets, will purchase the holding in Beijing-based China Post & Capital Fund Management Co from its third and smallest shareholder, Beijing Changan Group, the sources said.
The deal has received regulatory approval, they added.
China Post Fund was established in 2006 and Capital Securities and China Post Group, the country's biggest postal service provider, are major shareholders.
SMFG is hoping the deal will also lead to money management demand from pension funds and is looking at selling Chinese investment products in Japan through Sumitomo Mitsui Asset Management and other units, the sources said.
Of China's 66 fund management firms, more than half are Sino-foreign ventures, and the market is luring more entrants.
SMFG is the third Japanese company to invest in a Chinese fund house. Rival Mitsubishi UFJ Trust and Banking Corp and Nikko Asset Management already have stakes in Chinese fund ventures.
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