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Tuesday, July 11, 2017

What's Next for KraneShares After the Sale?

Reported by Jennifer Qiao

KraneShares is selling a majority stake, and the ETF shops' three chiefs will stay on the company. China International Capital Corporation Limited (CICC) has signed an agreement to acquire a 50.1 percent majority stake in Krane Funds Advisors LLC. MFWire first reported on the deal yesterday.

Brendan Ahern, chief investment officer at KraneShares, tells MFWire that the full management team at KraneShares will remain including Jonathan Krane, CEO and managing member at Krane Funds, and Jennifer Krane, chief compliance officer at Krane Funds. "We have a strong incentive to stay and leverage great resources to grow the firm," says Ahern.

Ahern tells MFWire that this partnership gives KraneShares the "ability to invest in new people and capitalize on the opportunity to provide resources to tell stories to a wider audience...CICC is a leading provider of education on China's markets. Ultimately it's about growing business and products domestically and internationally. This partnership will allow us to leverage CICC's resources and utilize its global footprint to promote the growth of foreign investors coming onto China's onshore markets."

The Krane Funds' assets have tripled in half a year, from $245 million in AUM in December 31st, 2016 to $754 million in AUM as of July 7th, 2017. Krane Funds offers five funds; KraneShares Sacks New China ETF, KraneShares CSI China Internet ETF, KraneShares Bosera MSCI China A Share ETF, KraneShares E Fund China Commercial Paper ETF, and KraneShares FTSE Emerging Markets Plus ETF.

"While China is one of the largest economies, it comprises only 3 percent of the MSCI ACWI All Country World Index. We saw an under-investment in china and believe that this under-investment would be rectified in time," Ahern says, adding that the "ultimate benefactors are investors" in terms of the increased exposure and expertise CICC provides.

CICC, founded in 1995, is based in Beijing and lays claim to being China's first joint venture investment bank. In 2009 CICC US Securities opened an office in New York and is the center for CICC's business operations in the Americas. CICC's full-service business framework involves investment banking, equities, FICC, wealth management and investment management.

"We are a Chinese investment bank with unique international DNA," states Mingjian Bi, acting chairman and CEO of CICC. "Our entry into the U.S. asset management and ETF industry with KraneShares' platform represents a remarkable opportunity for us to provide high quality investment products and services to our clients, including individuals, advisors, and institutions, domestically and overseas. We are excited to have this opportunity to significantly grow KraneShares and the CICC business in the United States and globally."  

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