JPMorgan to Raise Equity Stake in Chinese Securities Joint-venture from 51% to 71%

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Wall Street bank JPMorgan will significantly raise its stake in its majority-owned securities joint-venture in China, amidst further moves by Chinese regulators to remove restrictions on foreign investment in the domestic finance sector.

JPMorgan will raise its ownership of JP Morgan Securities (China) (摩根大通证券(中国)) from 51% to 71%, after acquiring a 20% equity stake from Shanghai Waigaoqiao Group Share Limited Company (上海外高桥集团股份有限公司) for a consideration of 178 million yuan (approx. USD$26.01 million), according to information made available on 2 April.

In March 2019 both JP Morgan Securities and Nomura International Securities obtained approval from Chinese regulators for establishment as the first group of joint-venture securities brokerages controlled by foreign investors.

In August JP Morgan Securities (China) completed industrial and commercial registration with Chinese regulators, indicating it had registered capital of 800 million yuan.

At such time J.P. Morgan International Inc. held a 51% stake, with domestic partners holding the remaining 49% of equity, including:

  • Shanghai Waiqaoqiao Group Share Limited Company (摩根大通国际金融有限公司);
  • Zhuhaishi Mailande Fund Management Co., Ltd. (珠海市迈兰德基金管理有限公司);
  • Beijing Langxin Investment Co., Ltd. (北京朗信投资有限公司);
  • Xinjiang Zhongwei Equity Investment Limited Partnership Enterprise (新疆中卫股权投资有限合伙企);
  • Shanghai Binhe Investment Management Centre (Limited Partnership) (上海宾阖投资管理中心(有限合伙)).

JPMorgan has previously indicated that it plans to acquire 100% ownership in its securities joint-venture within the next several years, while in March 2020 China officially annulled its ownership restrictions for foreign investors.

The latest move from JPMorgan arrives amidst efforts by in­ter­na­tional banks to ex­pand their clout and foot­print in China, fol­low­ing the tout­ing of greater fi­nan­cial open­ing by Bei­jing. 

On 1 September the China Securities Regulatory Commission (CSRC) announced that it had approved the establishment of DBS Securities (China) (星展证券(中国)有限公司), backed by Singapore’s DBS Bank, while the week previously it approved the establishment of Daiwa Securities (China) Co., Ltd. (大和证券(中国)有限责任公司), backed by Japan’s Daiwa Securities Group.

At the time of reporting China is host to 8 securities brokerages that are controlled by foreign investors, whether via majority ownership at the time of establishment or increases in equity stakes in joint-ventures.

These joint-ventures include:

  • J.P. Morgan Securities (majority-ownership at time of establishment);
  • Nomura International Securities (majority-ownership at time of establishment);
  • Daiwa Securities (majority-ownership at time of establishment);
  • DBS Securities (majority-ownership at time of establishment);
  • UBS Securities (majority-ownership via equity increase);
  • Goldman Sachs Securities (majority-ownership via equity increase);
  • Credit Suisse Founder Securities (majority-ownership via equity increase);
  • Morgan Stanley Hoaxing Securities (majority-ownership via equity increase).

In June 2020 JPMorgan obtained approval from the China Securities Regulatory Commission (CSRC) to launch a wholly invested futures vehicle, and in April 2020 it moved to acquire full ownership of its Chinese mutual fund joint-venture.

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