(Yicai Global) Oct. 12 -- Guotai Junan Securities has been given the greenlight to take a majority stake in Hua An Fund Management, making it the first Chinese securities firm to operate two licensed public fund managers.

Guotai Junan is purchasing an 8 percent stake in Hua An from Shanghai Industrial Investment for USD1 billion (USD139.5 million), the leading Chinese brokerage said yesterday. This will hike its equity to 51 percent, and the move has been approved by the China Securities Regulatory Commission, it added.

Chinese regulations used to state that a single company could only operate one public fund manager. But in May, these restrictions were relaxed to give the asset management sector a boost.

That month, Guotai Junan, which already has a license through its fund manager Guotai Junan Securities Asset Management, said it will obtain a controlling stake in Hua An to expand the scale of its business. The Shanghai-based firm first bought into Hua An in 2014, acquiring a 20 percent stake, which it then increased in March 2021 and March 2022.

The acquisition of Hua An is expected to bolster Guotai Junan’s performance. Affected by the downturn in the stock market, Guotai Junan’s net profit slumped 20.5 percent in the first half from the same period last year to CNY6.4 billion (USD892.8 million) while revenue tumbled 10.8 percent to CNY19.6 billion (USD2.7 billion), according to its biannual report.

Hua An, on the other hand, has been doing very well. The firm posted a 13.3 percent jump in net profit in the first half from a year earlier to CNY510 million (USD71.1 million). Revenue climbed 5.2 percent to CNY1.8 billion. It had CNY657.9 billion (USD91.7 billion) in assets under management as of the end of June, a gain of 1.2 percent from the end of last year.

Editor: Kim Taylor