JP Morgan revealed that it had won an auction to acquire an additional 2 percent stake in China International Fund Management from its Chinese partner, Shanghai International. It is also set to become the first foreign firm to own a majority stake in an onshore funds business under new rules.

The bank paid $34.3 million for the additional 2 percent which will take its stake up to 51 percent.

Prior to the deal, JP Morgan held a 49 percent stake in China International Fund Management, a joint venture between the bank and its local partner.

Under these new rules regulated by China in 2017, financial asset management companies were allowed to own up to 51 percent of their Chinese mutual fund ventures.

“We are looking forward to the next steps to proceed with this acquisition, working closely with our joint venture partners. Once completed, the deal will be contingent on the approval of regulators in the US and China,” Dan Watkins, Asia Pacific CEO of JP Morgan Asset Management told the media.

Besides acquiring a majority stake in a Chinese fund, JPMorgan is also planning to set up a new securities company in Shanghai with a 51 percent stake. The bank will collaborate with Chinese partners including Shanghai Waigaoqiao Free Trade Zone Group and four other Chinese investment companies.

Another US firm Morgan Stanley is also inching closer to gain a controlling stake in its Chinese securities joint venture by acquiring an additional 2 percent stake from partner Huaxin Securities. The deal will also increase Morgan Stanley’s stake in Morgan Stanley Huaxin Securities to 51 percent.

According to reports, 1.4 billion Chinese citizens had investible financial assets of $20 trillion in 2018. The figure is only expected to increase to $26 trillion by the end of 2020.