SocGen to sell stake in China JV to Warburg

The French bank is reportedly selling its stake in the Shanghai-based asset management company Fortune SG Asset Management to Warburg Pincus.

French bank Société Générale (SocGen) is reportedly looking to sell its 49 percent stake in Fortune SG Asset Management, the bank’s joint venture with the Chinese state-owned iron and steel company Baosteel Group, to the global private equity firm Warburg Pincus.

Warburg, one of the earliest private equity firms to invest in China, is currently seeking to raise $2 billion for its latest China-focused fund, Warburg Pincus Private Equity China Fund. The fund corpus would be used to make investments in the country alongside the firm’s $13.4 billion global fund Warburg Pincus Private Equity XII.

Warburg, which counts financial services as one of its target sectors, is looking to capitalise on China’s 8 trillion yuan ($1.2 trillion; €1.1 trillion) mutual fund industry, sources familiar with the matter told Reuters.

Financial details of the transaction were not disclosed. Warburg and SocGen declined to comment on the deal when approached by Private Equity International. Fortune SG could not be reached for comment.

Warburg has invested more than $5 billion in financial services companies and related investments globally. These include investments in the Beijing-based non-banking financial enterprise China Huarong, Jaipur-based vehicle and home financing company Au Financiers, and Dubai-headquartered payments business Network International.

Paris-based SocGen first entered China’s mutual fund sector in 2003 when it set up a joint venture with Baosteel in an effort to expand its business in the country. In 2006, SocGen bid for a controlling stake in Guangdong Development Bank together with the Beijing-based oil and gas company Sinopec and Baosteel, but lost to US banking giant Citigroup. Few years later SocGen also set up an auto leasing JV with Baosteel in 2009.

Fortune SG, which manages over 181.9 billion yuan worth of assets, is the 13th largest mutual fund firm in China by assets, according to the Asset Management Association of China.