Gottex Fund Management is to establish a joint venture with VStone Asset Management, a private asset manager, which will provide access to mainland China asset management and investors.
Gottex, which has one of the largest hedge fund teams in Asia, will partner with Shanghai-based VStone, led by Dr Jiwu Chen, the former chief investment officer of Fullgoal Fund Management and China Life.
VStone’s total staff of 35 includes a team of mainland China equity and private equity managers and investment professionals.
The JV will provide institutional and qualified private investors access to the China onshore market (including A-Shares) and China mutual fund sector. Conversely, the partnership will operate as Gottex’s distribution channel in mainland China. Gottex will acquire a minority stake in the newly formed company, while VStone will transfer its existing products and business activity to the new entity. The transaction will include a cash consideration from both parties and Gottex will issue covered warrants over 1.725 million Gottex shares or roughly five per cent of its issued share capital to the principals of VStone at an exercise price of CHF3.50. The deal is subject to Chinese administrative approvals which are expected to be granted within the next two months.
Max Gottschalk (pictured), chief executive of Gottex Asia, says: “We are extremely pleased to have concluded our negotiations for the establishment of a joint venture asset management company with VStone and Dr. Chen, a seasoned and highly respected long-term investor in the China onshore equity and financial markets. According to research from McKinsey 75 per cent of China’s urban population will reach middle class status within less than 10 years from now which shows the enormous potential in China. The asset management industry being still in its infancy, recent government reforms and continued support for the development of a fully developed capital markets shall further boost the growth opportunity for the asset management industry in the region. Being able to offer our investors access to China’s onshore equity and bond markets through a highly professional team and institutional process provides us with confidence that we believe our new venture will become a great success.”
Dr Chen says: “With China's economic development and accelerated pace of reform, along with the internationalisation of the RMB and the establishment of Shanghai free trade zone, China financial markets are constantly integrating into the global financial markets. VStone and Gottex, after a long period of mutual understanding, became partners. The partnership is not only on a capital level, but also based on a mutual recognition of ideas and goals. By leveraging the strengths and experience of both sides, the VStone Gottex partnership will have great prospects and create more value for our clients, shareholders and investors in the future.”