CICC to Acquire Majority Stake in KraneShares

China International Capital Corporation Limited (CICC), one of China’s leading investment banking and financial services firms, announced today the signing of a definitive agreement to acquire a majority stake in Krane Funds Advisors, LLC, (“KraneShares”) a U.S. asset management firm best known for its China focused KraneShares exchange traded funds (ETFs) and China investment strategies. The strategic acquisition combines CICC’s extensive global research, investment and wealth management platforms with KraneShares’ ETF expertise.

CICC, founded in 1995 by China Construction Bank and Morgan Stanley, was the first investment bank formed through a China-US joint venture[1]. Today, CICC serves corporate, institutional, government, and wealth management clients in China. With deep roots and a thorough understanding of the Chinese economy, CICC is a leading financial service provider to global clients. CICC’s global shareholders include CIC, the China Sovereign Wealth Fund, GIC, a Singapore Sovereign Wealth Fund, and two global private equity firms: TPG and KKR. CICC is a public company listed on the Hong Kong Stock Exchange (3908).

“We are a Chinese investment bank with unique international DNA,” said Mr. Mingjian Bi, Acting Chairman and Chief Executive Officer 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.”

Among its ETF offerings, KraneShares has established a dominant market leadership position in the China Internet sector with KraneShares CSI China Internet ETF (KWEB), which holds some of the most innovative global technology companies including Alibaba, Baidu, and Tencent[2].

Additionally, KraneShares is a leading provider of financial products and education focused on accessing China’s equity and fixed income markets. KraneShares was the first to issue an MSCI-linked China A share ETF in the United States[3]. The KraneShares Bosera MSCI China A Share ETF (KBA) is comprised of stocks listed on the Shanghai & Shenzhen exchanges and tracks the MSCI China A International Index.

“KraneShares is proud to join forces with CICC,” said Jonathan Krane, CEO of KraneShares. “CICC and KraneShares are both singularly focused on China. We share the same mission of building a trusted bridge of financial knowledge and expertise between the United States and China. We believe the combined company will be the premier source for China investment products and research globally.”

 


Carefully consider the Funds' investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Funds' full & summary prospectus, which may be obtained by visiting www.kraneshares.com. Read the prospectus carefully before investing.

ETF shares are not individually redeemable other than in large Creation Units. Shares are bought and sold at market price (closing price) not NAV. Brokerage commissions will reduce returns.

KraneShares ETFs are registered with the U.S. Securities and Exchange Commission. Investing involves risk, including possible loss of principal. The Funds focus their investments primarily with Chinese issuers and issuers with economic ties to China. The Funds are subject to political, social or economic instability within China which may cause decline in value. Fluctuations in currency of foreign countries may have an adverse effect to domestic currency values. Emerging markets involve heightened risk related to the same factors as well as increase volatility and lower trading volume. Current and future holdings are subject to risk.

Narrowly focused investments typically exhibit higher volatility. Internet companies are subject to rapid changes in technology, worldwide competition, rapid obsolescence of products and services, loss of patent protections, evolving industry standards and frequent new product productions. Such changes may have an adverse impact on performance.

The ability of the KraneShares Bosera MSCI China A ETF to achieve its investment objective is dependent on the continuous availability of A Shares and the ability to obtain, if necessary, additional A Shares quota. If the Fund is unable to obtain sufficient exposure due to the limited availability of A Share quota, the Fund could seek exposure to the component securities of the Underlying Index by investing in depositary receipts. The Fund may, in some cases, also invest in Hong Kong listed versions of the component securities and B Shares issued by the same companies that issue A Shares in the Underlying Index. The Fund may also use derivatives or invest in ETFs that provide comparable exposures.

The KraneShares ETFs are distributed by SEI Investments Distribution Company, which is not affiliated with Krane Funds Advisors, LLC or China International Capital Corporation Limited.

 
[1]: Data from CICC, retrieved 6/07/2017
[2]: Percent of KraneShares’ net assets as of 5/31/2017: Tencent: KWEB: 11.30%, KFYP: 4.81%, KEMP: 3.79%. Alibaba: KWEB: 9.55%, KEMP: 2.00%. Baidu: KWEB: 7.02%, KEMP: 1.38%.
[3]: Tom Lydon, (Mar 5, 2014), "A New ETF Avenue to Mainland China", ETF Trends