Other BriefingsQIA Reported to Acquire 10 percent Stake in China Asset Management Co
Qatar’s sovereign wealth fund, QIA, is acquiring a 10 percent stake in China Asset Management Co. Ltd., China’s second-largest mutual fund company. This reflects a trend of Gulf investors seeking opportunities in China as Western investors pull back.
By Qian Zhou
Qatar’s sovereign wealth fund, the Qatar Investment Authority (QIA), has agreed to acquire a 10 percent stake in China Asset Management Co. Ltd. (China AMC), China’s second-largest mutual fund company, Reuters reported.
The proposed investment underscores the deepening economic relationship between China and Middle East countries, particularly within the financial sector.
More about the deal
According to reports, the QIA will purchase the stake from Tianjin Haipeng Technology Consulting Co. Ltd., which is owned by Primavera Capital Group, a Hong Kong-based investment firm established by former Goldman Sachs partner Fred Hu.
The deal has been submitted to the China Securities Regulatory Commission (CSRC) for approval. If approved, the deal would facilitate Primavera’s long-planned exit. Upon completion, the deal will also position QIA as the third-biggest shareholder in China AMC, which manages over RMB 1.8 trillion (US$248 billion) in assets.
The news of this acquisition was disclosed by two anonymous Reuters sources. As of the time of writing, both QIA, Primavera, and China AMC have declined to comment on the matter.
While specific financial details remain scarce, a March announcement by Chinese brokerage Citic Securities suggested that the 10 percent stake is valued at least at US$490 million.
QIA’s investment in China
In recent years, the QIA has strategically expanded its investment portfolio in China, demonstrating a multifaceted approach and long-term vision. The QIA actively engages in various core sectors, including finance, energy, technology, and aviation, to capitalize on China’s economic growth.
As early as 2006, the QIA participated in the IPO of Industrial and Commercial Bank of China (ICBC), acquiring shares worth US$206 million. Additionally, during the 2010 Agricultural Bank of China (ABC) IPO, the QIA invested a substantial US$2.8 billion.
In 2014, in collaboration with China CITIC Group, the QIA established a US$10 billion regional investment fund. Prior to this, the QIA had already become the fourth-largest shareholder in China CITIC Group.
The QIA has shown keen interest in technology and financial innovation. Notably, it led a funding round for Lufax (a fintech company) in 2018, investing over US$600 million. In 2020, the QIA not only subscribed to Xpeng Motors’ US$100 million preferred shares but also participated in the biotech firm Transcenta Group’s US$105 million cross-round financing. Most recently, in February 2024, the QIA participated in the Series B1 financing of Oricell Therapeutics, a company focused on innovative cancer immunotherapy drug development. These investments highlight the QIA’s active pursuit of collaboration opportunities in China’s tech and financial sectors.
The QIA has also demonstrated interest in the Hong Kong stock market. It has invested in several publicly listed Hong Kong companies, including WuXi Biologics, Fosun Pharma, and Kingdee International. These investments diversify QIA’s asset portfolio and provide additional opportunities.
According to information shared at the 2022 China-Arab States Investment and Trade Association, the QIA has invested US$10 billion in China since 2016. This underscores the QIA’s commitment to the Chinese market and reflects its confidence in China’s long-term economic prospects.
Bigger picture: Deepening ties between China and the Middle East
The QIA-China AMC deal comes amid Gulf investors actively seeking investment opportunities while their Western counterparts scale back their exposure in the Chinese market.
Due to factors like the Federal Reserve’s interest rate hikes and geopolitical tensions, European and American funds are slightly hesitant to invest in the Chinese market. For instance, Norway’s US$1.4 trillion sovereign wealth fund closed its only office in China last year, and financial firms like Fidelity International Ltd and Morgan Stanley are cutting China-focused jobs or delaying expansion plans.
In contrast, Middle Eastern sovereign wealth funds actively seek opportunities in the Chinese market. Besides the mentioned QIA deal, in the first quarter of 2024, Abu Dhabi’s sovereign wealth fund (ADIA) offered discounted buyouts for investors exiting China’s private equity market.
At the 2023 China-Arab Entrepreneurs Summit, Nicolas Aguzin, then CEO of Hong Kong Exchanges and Clearing Limited, predicted that Middle Eastern sovereign wealth funds are expected to grow from US$4 trillion to US$10 trillion by 2030. Additionally, 10 percent to 20 percent of these funds will flow into China, reflecting confidence in China’s long-term economic prospects and the potential of its emerging industries.
On May 30, 2024, President Xi Jinping said at a China-Arab States Cooperation Forum in Beijing that China is seeking to strengthen its relations with Arab states.
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