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Manulife Financial to purchase fund management joint venture in China

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Manulife Financial has signed an agreement to purchase Fortis Bank’s 49 per cent ownership in ABN Amro Teda Fund Management for cash purchase consideration of EUR105m (USD156m).

The acquisition is expected to be accretive to Manulife Financial earnings in the first year and have a negligible impact on capital levels. The agreement is subject to regulatory approval and is expected to close in the first quarter of 2010.

The new joint venture, which will be called Manulife Teda Fund Management will provide traditional retail and institutional asset management across the Chinese market.

While Manulife Teda Fund Management plans to maintain and grow its existing platform of asset management products, it also plans to seek regulatory approval for expanding its lines of business as and when permitted by the China Securities Regulatory Commission and other relevant bodies.

Manulife Financial president and chief executive Donald Guloien (pictured) says: "Our new partnership with Teda provides a rare strategic opportunity to make a fast track entry into China’s large and high growth market for individual and institutional wealth management services. This accelerates our expansion in China’s huge growth market by several years. We are impressed by the quality of this asset management operation with its strong management team and competitive culture. The business has shown excellent performance, underpinned by its quality administration, use of web-based tools, positive reputation with regulators and satisfied customers."

The asset management industry in China is expected to become one of the largest in the world in the coming decade. Current industry assets under management of USD338bn (RMB2.3trn) are forecast to grow significantly and exceed USD1trn (RMB6.9trn) by 2014.

China has one of the world’s highest savings rates at 51 per cent of GDP and, to date, a very high proportion of household wealth is held in the form of deposits.

"Both parties will cherish the opportunity to cooperate closely to make rapid progress," says Liu Huiwen, president of Teda. "Manulife Teda, in Chinese, has a very auspicious sounding name: Manulife stands for ‘abundant reward’ while Teda stands for ‘all the best wishes are destined to come true.’ We believe with this combination of close cooperation and our lucky brand name, nothing can deter us from achieving success."

ABN Amro Teda Fund Management was established in 2002. It is 51 per cent owned by Northern International Trust, part of Tianjin Teda Investment, a large company owned by Tianjin City.

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