This move coincides with a broader trend of increased Middle Eastern investment in China.
Qatar’s sovereign wealth fund has agreed to purchase a 10 percent stake in China’s second-largest mutual fund company, Reuters has reported.
The Qatar Investment Authority’s (QIA) proposed investment in the China Asset Management Co (ChinaAMC) is part of a broader trend of increased Middle Eastern investment in China.
This deal could provide Qatar with significant access to China’s rapidly expanding $4.3tn mutual fund industry.
Two sources privy to the matter have revealed to Reuters that QIA plans to acquire the stake from investment firm Primavera Capital, although financial details were not disclosed. The proposed transaction has been submitted for Chinese regulatory approval, as confirmed by the anonymous sources.
Primavera Capital, a Hong Kong-based investment firm founded by former Goldman Sachs partner Fred Hu, is set to make a long-planned exit with this deal.
However, it remains uncertain how long the regulatory approval process will take or whether it will be successful.
Chinese brokerage Citic Securities, which holds approximately 62 percent of ChinaAMC, had indicated in March its decision to forgo its right to purchase Primavera’s 10 percent stake, valued at least $490m.
Pending approval, the transaction would elevate QIA to the status of the third-largest shareholder in ChinaAMC. The mutual fund company manages assets exceeding $248bn, providing a diverse range of mutual funds and exchange-traded funds catering to both retail and institutional investors.
According to Global SWF, Middle Eastern sovereign wealth funds have invested $7bn in China since June of last year, a fivefold increase from the previous 12 months.
The surge occurs as some Western financial institutions scale back their investments in China due to economic recovery concerns and geopolitical risks.
Last November, QIA’s chief mentioned that the fund was exploring opportunities in China’s retail, healthcare, tech, and logistics sectors.
China’s President Xi Jinping recently emphasised the importance of strengthening relations with Arab states at last week’s China-Arab States Cooperation Forum in Beijing.
This enhanced cooperation is part of a broader initiative to foster the financial sector, infrastructure, and technology exchanges between China and the Gulf region.
Hong Kong securities regulators have also visited the region to encourage capital flows between the Gulf and China.
The QIA manages over $500bn in assets and has not commented on the deal, nor have Primavera and ChinaAMC, Reuters said.
According to Reuters, the growing investment from Gulf states is seen as a strategic counterbalance to the withdrawal of some Western financial firms from China.
This trend is underscored by the closure of Norway’s $1.4tn sovereign wealth fund office in China and the downsizing of China-focused jobs at firms like Fidelity International Ltd and Morgan Stanley.
