M&A

23 November, 2009

UPDATE 1-Manulife to buy China fund manager stake

* Says acquisition to be accretive in the first year

* Says acquisition to close in the first-quarter 2010

* Says asset management sector in China poised to balloon (Figures in U.S. dollars unless noted)

By Pav Jordan

TORONTO, Nov 23 (Reuters) - Canada's top life insurer Manulife Financial Corp (MFC.TO) said late on Wednesday it agreed to buy a 49 percent stake in ABN AMRO TEDA Fund Management Co in China for $156 million in cash, following up on pledges to hit the acquisition trail.

Manulife said it bought the stake from Fortis Bank SA, which is in turn controlled by BNP Paribas (BNPP.PA), France's largest bank.

"This accelerates our expansion in China's huge growth market by several years," Donald Guloien, Manulife's chief executive, said in a statement to markets.

The acquisition comes less than a week after Guloien announced a C$2.5 billion ($2.4 billion) equity rise, saying the company had hit fortress levels of capital and was ready to act on acquisition opportunities deemed "highly attractive."

The ABN AMRO TEDA Fund Management Co deal is expected to close in the first quarter of 2010, and Manulife said it would be accretive to earnings in the first year and have a negligible impact on capital levels.

ABN AMRO TEDA Fund Management Co. was established in 2002 and currently has assets under management of $3.8 billion.

It adds to a China portfolio that Manulife has been building since it set up shop there about 100 years ago.

The asset management industry in China is poised to balloon over the next decade, from industry assets under management of $338 billion to figures exceeding $1 trillion, Manulife said.

"China has one of the world's highest savings rates at 51 percent of GDP and to date, a very high proportion of household wealth is held in the form of deposits," Manulife said.

More than 30 foreign institutions, including JPMorgan (JPM.N), Credit Suisse (CSGN.VX) and Morgan Stanley (MS.N) have formed fund ventures in China, while companies including Aberdeen Asset Management (ADN.L) and T.Rowe Price (TROW.O) are also seeking access to the China's fund market.

BNP Paribas currently owns three Chinese fund ventures -- SYWG BNP Paribas Asset Management Co, Fortis Haitong Investment Management Co and ABN AMRO TEDA, after taking over Fortis (FOR.BR) of Belgium earlier this year.

Since the global economic crisis took major competitors out of the running, Manulife has become the biggest life insurer in North America and one of the largest in the world. ($1=$1.06 Canadian) (Reporting by Pav Jordan; Additional reporting by Samuel Shen and Parvathy Ullatil in Shanghai and Hong Kong, editing by Leslie Gevirtz) ((pav.jordan@thomsonreuters.com; +1 416 301 8153; Reuters Messaging: pawel.jordan.reuters.com@reuters.net))

Source: http://www.reuters.com