Warburg Pincus To Acquire 23.3% Of Zhong Ou Asset Management Co.

According to exchange filings and a source, Warburg Pincus is getting closer to acquiring a stake in Zhong Ou Asset Management Co from Intesa Sanpaolo, highlighting the US private equity firm's unwavering interest in China's $3.8 trillion mutual fund industry.

Intesa Sanpaolo, an Italian banking group, disclosed in its 2021 annual report that its board of directors had approved the sale of a 23.3% stake in Zhong Ou to Warbug Pincus. According to the report, the stake was held by former UBI Banca, which was acquired by Intesa Sanpaolo in 2020.

A source familiar with the transaction confirmed the planned 23.3 percent stake sale to Warburg Pincus on Monday.

In accordance with a disclosure made over the weekend by the China Securities Regulatory Commission (CSRC), Zhong Ou has received regulatory feedback on its application for a shareholder change involving a stake sale to Warburg Pincus.

The CSRC did not specify how much of a stake Warburg Pincus will acquire in Zhong Ou, which manages more than 350 billion yuan ($51.3 billion) in assets (AUM).

Warburg Pincus declined to comment, and Intesa did not respond immediately to a request for comment.

The news comes as the CSRC expedites application approvals for foreign financial institutions, having recently permitted Morgan Stanley, JPMorgan, and Manulife Financial Corp to acquire full ownership of their Chinese mutual fund ventures.

The CSRC asked Warburg Pincus to explain how it would support Zhong Ou's development in the regulatory feedback. The regulator also demanded additional proof from Warburg Pincus that it is a leading global player with a strong international reputation and track record.

If approved, the transaction would be Warburg Pincus' second investment in a Chinese mutual fund. The firm currently owns a 29 percent stake in Hwabao WP Fund Management Co.

Since its entry into China in 1994, Warburg Pincus has been actively investing in China's real estate and healthcare industries, having invested more than $15 billion in over 150 Chinese companies.