Mitsubishi UFJ Buys BNP Stake - Analyst Blog

Mitsubishi UFJ Financial Group (MTU) is planning to buy BNP Paribas' (BNPQY) stake in a Chinese fund venture, according to a Reuters report. The company intends to acquire this stake for $50 million.

Both Mitsubishi UFJ and BNP Paribas are planning to tender proposals to China’s securities regulator for the approval of the SYWG BNP Paribas Asset Management Co. stake. Formed in 2004, SYWG BNP Paribas is a joint venture between BNP Paribas and Chinese brokerage Shenyin & Wangguo Securities Co, which controls a 67% stake in the venture. Though an application had been submitted previously, it was discarded on some minor technical grounds.

This deal would also enable BNP Paribas to satisfy the Chinese regulation that forbids a foreign company from taking part in more than one fund venture. Japan's Nomura Holdings Inc. and London-based Ashmore Group also bidded for this stake.

Last Friday, Mitsubishi reported its fiscal first quarter results for the April-June quarter. Its earnings more than doubled from the prior year quarter on the back of gains on debt securities and lower credit loss provisions. Mitsubishi UFJ reported a net income of Y166.35 billion ($1.9 billion), compared with Y75.94 billion in the prior year quarter.

This deal would help Mitsubishi UFJ to take advantage of the growing Chinese economy and access its mutual funds market. The Chinese mutual fund market is expected to increase by leaps and bounds in the next five years. Other big companies that are already exploring this market through joint ventures include JPMorgan Chase & Co. (JPM), Credit Suisse Group (CS) and Morgan Stanley (MS).
 
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