Gottex Fund Management is to establish a joint venture with VStone Asset Management to gain access to China and its investors, the third major deal this year.
The Switzerland-listed fund of hedge fund manager says the joint venture will provide institutional and qualified private investors access to the Chinese onshore market, including A-shares.
The partnership will operate as Gottex’s distribution channel in China. Gottex will acquire a minority stake in the newly formed company, while Shanghai-based VStone will transfer its existing products and business activity to the new entity.
“The [Chinese] 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,” says Max Gottschalk, chief executive officer of Gottex Asia, adding that there is “enormous potential” in China.
The transaction will include a cash consideration from both parties and Gottex will issue covered warrants over 1,725 million of its shares, or roughly 5% of its issued share capital, to the principals of VStone at an exercise price of 3.50 Swiss franc (€2.84).
At the end of September, Gottex had $5.8 billion (€4.3 billion) of total fee-earning assets.
This is the third major transaction for Gottex, which partnered with Tokyo-based Astmax Asset Management in May to provide hedge fund and multi-asset investments to Japanese investors.
Gottex entered into an agreement with Astmax to sub-advise institutions and other types of clients together.
In March, Gottex acquired a majority stake in UK-based, multi-asset manager Frontier Investment Management in a cash and share deal designed to broaden the company's focus from its main fund of hedge funds business.
The China deal is subject to regulatory approval, which Gottex says is expected to be granted within the next two months.
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