JP Morgan Fleming, the asset management arm of JP Morgan Chase, said yesterday it will buy a 33% stake in a fund management joint venture in China for 49.5 million yuan ($5.98 million), Reuters reports.

Domestic partner Shanghai International Trust and Investment Corp. would own the remainder of the 150 million yuan venture, JP Morgan said in a statement, adding it intended to raise its stake to 49% when regulations allowed.

The companies, which signed the agreement last week, said they planned to launch their first equity fund by the end of this year or early next year. The venture is JP Morgan’s first step into China’s nascent but rapidly expanding funds industry, after earlier talks with Huaan Fund Management, which is partly owned by the Shanghai trust company, fell through in February.

The Shanghai trust firm helped set up Huaan – one of China's best-performing fund companies – in 1998 and is its largest shareholder with a 30% stake.

Overseas fund managers have been enticed by China's $1.2 trillion savings pool and its $520 billion yuan-denominated market, which rivals Hong Kong as Asia’s second-largest market.

Belgian-Dutch financial giant Fortis NV has a similar venture with Haitong Securities Co. Ltd., while Societe General and ING Groep NV have also secured operating licenses.

Others, such as Allianz AG, are waiting in the wings for their own licenses.

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