(Yicai Global) April 17 -- Warburg Pincus is purchasing over 20% stake in Zhong Ou Asset Management to become the Chinese mutual fund’s biggest institutional shareholder as the US private equity firm seeks to expand its footprint in China’s huge wealth management sector.

The stake Warburg Pincus is buying accounts for 23.3% equity stake in Zhong Ou, representing registered capital of CNY51.26 million ($7.48 million), the China Securities Regulatory Commission (CSRC) said in a statement announcing the approval. Warburg Pincus declined to disclose the transaction value.     

The investment in Zhong Ou is a key step for Warburg Pincus to increase its presence in China's asset management market, partner Ben Zhou told Yicai Global.

Warburg Pincus remains steadfastly optimistic about the development prospects of China's mutual fund industry, which is entering a brand new era of development with citizens’ stable wealth accumulation and the continuous growth of the capital markets, Zhou said.

Before this transaction, Turin-based Intesa Sanpaolo held a 25 percent stake. Zhong Ou’s Chairman Dou Yuming owns another 25 percent stake, Guodu Securities and employee stock ownership programs each hold 20 percent equity and the stakes of other shareholders are no more than 3.3 percent each.

Zhong Ou managed CNY481.1 billion (USD70 billion) worth of funds as of the end of the first quarter, ranking 21st in the mutual fund industry, according to data from Wind Information. Of this, CNY289.7 billion worth are stocks and hybrid funds.

Before the latest investment, Warburg Pincus bought a 49 percent stake in Hwabao WP Fund Management, which it secured in 2017 when the firm was called Fortune SG, and still holds 29 percent equity in it.

China’s mutual fund market is proving highly attractive to international investment institutions as personal wealth grows. In the first quarter, two mutual fund managers wholly-owned by overseas businesses received permits to operate and two joint venture fund firms were taken over by foreign capital.

There are eight mutual fund managers that are wholly-owned foreign enterprises and 43 fund firms which are jointly owned by Chinese and overseas capital, according to Yicai Global research.

Editors: Tang Shihua, Kim Taylor