Macquarie Group Ltd, Australia's biggest investment bank has set up a trust company joint venture in China with an initial capital of 300 million yuan (US$44 million).
Sino-Australian International Trust Co, as the Shanghai-based joint venture is called, will enable the global provider of diversified financial services to offer yuan-dominated products, arrange domestic debt and equity financing, Macquarie said in a statement yesterday.
Macquarie owns 19.99 percent of the venture, the maximum allowed under current regulations. Beijing Sanjili Energy Co Ltd (Sanjili), a State-owned power generation company, owns 60 percent of the joint venture while Beijing Rongda Investment Ltd owns 20.01 percent. Several State-owned firms including the State Development and Investment Corp control Sanjili and Rongda.
The joint venture will initially focus on raising funds for companies and local government entities and provide yuan-based investment products to wealthy investors and institutional investors, Macquarie said.
"We see a fantastic opportunity given China's significant and swelling local currency savings pool," said Yu Jianping, chairman, Sanjili.
China's household savings reached an estimated 20 trillion yuan (US$3 trillion) in 2008, or 72.5 percent of its 2008 GDP. It grew in excess of 20 percent between 2007 and 2008.
"We are delighted to have a partner like Macquarie, one of the world's leading financial institutions with a track record of providing high quality and innovative investment services to its clients," Yu said.
Founded in 1969, Macquarie is a global provider of banking, financial, advisory, investment and funds management services. It operates in more than 70 office locations in 26 countries. Macquarie employed approximately 12,700 people and had assets under management of AUS$243 billion as on March 31, 2009.
"This joint venture will allow us to extend our client service capability as we build a domestic distribution network and to arrange financing for international clients operating in China and locally based corporates," said Andrew Low, head of Macquarie Capital Asia.
Industry analysts said China's trust companies have got well developed in the past two years after the banking regulator released a set of specific policies to guide the development of the industry in 2007.
In 2008, the trust companies' assets under management reached over 1 trillion yuan, which was about eight times of that in 2004, marking a 70 percent year-on-year growth. At the end of 2008, a total of about 50 trust companies realized 10.65 billion yuan of net profits.
Last week Macquarie and China Everbright Ltd had announced plans to raise US$1.5 billion for two funds to invest in infrastructure projects in China.
(China Daily August 28, 2009)