AIG China fund joint venture to launch first fund

The China joint venture asset management arm of AIG, the world's most valuable insurer, said it would begin selling its first fund next week, its maiden foray into the country's booming mutual funds sector. The fund would be marketed to domestic investors for a month starting on Monday and would target local stocks with sustained growth potential, the venture said in a prospectus published in official financial newspapers on Thursday.
"The fund will benefit from AIG's investment expertise," the prospectus said without elaborating.
The venture did not say how much it expected to raise but according to China's securities rules, the fund will have to rake in at least 200 million yuan ($24.2 million).
AIG Global Investment Corp, an arm of American International Group (AIG), owns 33 percent of the 100 million yuan venture set up with China's Huatai Securities in November after regulatory approval in July.
Nanjing-based Huatai, a mid-sized brokerage, owns a third of the venture, while China's Suzhou New District Hi-Tech Industrial Co, Jiangsu Communications Holding Co and Guohua Energy Investment Corp also have stakes.
AIG follows foreign firms such as Dutch investment bank ING and France's Societe Generale that operate ventures to sell mutual funds to the Chinese, who have $1.5 trillion in savings and are exploring alternatives to a rapidly crumbling cradle-to-grave welfare system.
Funds under management have ballooned to $40 billion from virtually zero about half a decade ago, but the nation's mutual funds industry made a loss of nearly $500 million in the second half of last year in line with a stock market slump.
Fund managers have said the business is lucrative, but stocks dived 15 percent in 2004 to become Asia's worst performer, hit by Beijing's economic-cooling steps, a slew of corporate scandals and fears of a flood of new shares.
In January, top US broker Merrill Lynch's maiden mutual fund in China raised a disappointing $130 million, less than half its target.
AIG, with a market value of $183 billion, owns licences to sell life insurance in eight Chinese cities. It is already the largest private equity investor in China with investment of $750 million, executives have said.