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22 December 2019

BlackRock, Temasek in talks on a joint venture in China

The deal is the latest step by overseas companies to tap into China’s financial opening, the two-year-old policy of improving access for foreign firms to the country’s capital markets and investors.

Bloomberg/Bryan van der Beek

BlackRock and Temasek Holdings have reached an agreement to start an asset management business in China along with one of the country’s biggest banks, reported Bloomberg.

The world’s largest asset manager and Singapore’s state investor entered a non-binding deal with China Construction Bank Corporation (CCB) to take a majority stake in the new unit. The arrangement would see the overseas firms develop and distribute products for local Chinese investors.

The deal, laid out in an MoU between the investment companies and CCB’s wealth management arm, is subject to regulatory approval.

It’s the first arrangement of its kind for BlackRock and comes as the New York-based firm seeks opportunities in China.

Larry Fink, BlackRock’s Chief Executive Officer wants his firm to become one of China’s leading asset managers and views the world’s second-biggest economy as one of BlackRock’s largest avenues for growth. Around seven per cent of BlackRock’s assets under management came from the Asia-Pacific region at the end of 2018.

Recent regulatory changes in China to increase access to its financial system allow foreign firms to hold 51 per cent of a wealth-management joint venture with a bank.

Despite China’s increasing financial openness, US firms including BlackRock have already faced challenges gathering assets for their what’s locally known as private securities funds.

Other foreign financial firms are striking joint ventures in China. UBS Group, JPMorgan Chase and Nomura Holdings all won regulatory approval for majority control of their local securities joint ventures.


RELATED STORIES: BlackRock Temasek UBS Group JPMorgan Chase Nomura Holdings China Construction Bank Corporation





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