(Updates with details, background)
SINGAPORE Nov 7 Singapore stockbroker Kim Eng Holdings KEHS.SI said it will form an asset management joint venture with Japan's Mitsubishi UFJ Securities (8306.T) to invest in Asian securities outside of Japan.
Under the terms of a memorandum of understanding signed on Wednesday, the two parties will also explore cooperating in areas such as equity brokerage and research.
The proposed asset management joint venture aims to manage more than S$1 billion ($693.5 million) within the first two years of operations, Kim Eng said in a statement.
"By going into fund management, Kim Eng intends to diversify its revenue base by increasing its exposure to fee-based income," Managing Director Ronald Ooi said.
Asian stock markets outside of Japan have enjoyed a spectacular run, with MSCI's index of Asia-Pacific stocks .MIAPJ0000PUS up 43.5 percent year-to-date, on top of a 29 percent rise last year.
Kim Eng and Mitsubishi UFJ Securities, a unit of Mitsubishi UFJ Financial Group, hope to finalise the agreement by the end of this year, added Kim Eng Executive Director Ong Seng Gee.
Founded in 1972, Kim Eng is the largest stockbroker in Indonesia and Thailand in terms of market turnover, according to Ong. The firm is No.2 in Singapore by market turnover and it has operations in the Philippines, Hong Kong, Malaysia, London and New York.
The Singapore company's shareholders include Taiwan's Yuanta Financial Holdings (2885.TW). (Reporting by Kevin Lim; Editing by Lincoln Feast)