China’s Guoyuan Securities plans to put up a new investment management firm alongside three other companies according to Red Pulse.
The new firm — which will have Guoyuan Group Communications Holding Group, Anhui Province Railway Construction Investment Fund and Anhui ITC Ventures as shareholders – will have an initial capital of 3 billion yuan ($484 million), the report said.
Red Pulse noted that Guoyuan Securities has not mentioned whether the new firm will seek a mutual fund license. Guoyuan holds a controlling stake in Changseng Fund Management Co, it added.
Red Pulse wrote:
“Despite being one of the oldest public fund managers, Changsheng’s performance has lagged the market, with total AUM decreasing by 39% in 1Q15. The new investment platform is likely an attempt to break from this legacy and set up a profitable venture.”
High returns offered by China’s fund managers have attracted investors into the industry, and in turn drove more firms to set up asset management ventures.
According to CNBC, funds offered 4%-6% in annual returns, higher than the 3% interest earned on deposits. As investors put money in fund managers, assets under management rose almost 15-fold in the past four years to 1.9 trillion yuan at the end of last year.
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