(Yicai Global) Jan. 7 -- A unit of Canada's IGM Financial intends to acquire a nearly 14 percent stake in China Asset Management, one of the Asian country's biggest asset managers, for almost CAD1.2 billion (USD903.6 million) via a related party transaction.

IGM's subsidiary Mackenzie Financial is entering into a definitive agreement with seller Power Corp. of Canada regarding the latter's 13.9 percent stake in the Chinese fund manager, the Winnipeg-headquartered parent of the buyer said in a statement posted on its website recently. Power has a controlling stake in IGM.

Established in 1998, ChinaAMC is one of China's first fund management companies. It had CNY1.61 trillion (USD252.6 billion) in assets under management as of June 2021. The company currently serves over 75,000 institutional clients and 184 million retail investors.

The transaction is expected to close in the first half of this year. The price is based on the Beijing-based target company's valuation of CNY41.5 billion (USD6.5 billion). After the transfer, IGM's stake in ChinaAMC should rise to 27.8 percent.

The Canadian buyer has been interested in the Chinese fund market for a while. In January 2017, IGM said it would acquire a 3.9 percent stake in ChinaAMC for CNY936 million (USD146.8 million). The resulting valuation was CNY24 billion, meaning that ChinaAM has grown nearly by three-quarters in value over the past five years.

The upcoming transaction should simplify the equity ownership structure and strengthen IGM’s earnings within a year, according to the statement. Mackenzie will enhance its participation in the rapidly growing Chinese asset management industry through the acquisition while building fully diversified solutions for its clients, it added.

"The Chinese asset management industry is one of the largest and fastest growing markets in the world," said James O’Sullivan, president and chief executive of IGM. "We believe that an expanded investment in ChinaAMC – one of the top three asset managers in the country – is strategically important to position IGM Financial for further growth."

Founded in 1967, Mackenzie had USD205 billion in assets under management as of Nov. 30, 2021. It provides services to more than one million retail and institutional clients.

Editor: Emmi Laine, Xiao Yi