HSBC Chinese Counterpart Auctions 31% of its stake in a Joint Venture

A declaration from an online auction reveals that HSBC's Chinese partner has put a 31% stake in a joint venture up for sale, with the European bank having the right of first refusal.

After sources told Reuters in May that Europe's largest bank was looking to increase ownership and grow its footprint in the asset management industry of the world's second-largest economy, the auction of a stake in HSBC Jintrust Fund Management was announced.

According to a webpage from China's National Public Resource Trading Platform, the Chinese state-owned Shanxi Trust, which holds a 51 percent stake in the joint venture, is auctioning off the partial ownership with an asking price of 1 billion yuan ($138.27 million).

The China fund unit is valued at 3.2 billion yuan, calculations based on the asking price shown.

The auction started to receive bids on Thursday last week. China Fund News first reported the stake auction late on Monday.

In response to an inquiry about whether it was considering purchasing the shares up for auction, HSBC stated that the bank was "eager to grow our businesses in China, including our fund management JV HSBC JinTrust, which is a strong, profitable business."

The statement said, "The Group is open to opportunities to grow its companies at the appropriate time and in line with its strategic growth plans.

According to the auction page, HSBC, which presently controls 49% of the fund unit, has the first opportunity to buy the stake. The bank still has the option to exercise its right. Existing shareholders have the right to reject auctioned shares first according to the preemptive right.