Alternative Investments: Now, BlackRock, Temasek in Chinese Wealth Management JV

December 26, 2019 | Alternative Investments, News
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BlackRock and Temasek to own majority in wealth management JV with China Construction Bank.

Global asset manager BlackRock and sovereign wealth fund Temasek are making a beeline for the vast opportunities opening up in the Land of the Red Dragon. Chinese regulations now allow foreign entities to own a majority stake in a wealth management joint venture operating in China. The two behemoths will tie-up with China Construction Bank (CCB), according to Reuters.

European asset manager Amundi broke ground when it won approval Friday for its wealth management JV with a Bank of China owned entity.

BlackRock is the world’s largest asset manager. Temasek is Singapore’s sovereign investment company with a portfolio value of S$313 billion as of end-March 2019. They will form the wealth management joint venture with CCB. CCB is China’s second-largest bank by assets after Industrial and Commercial Bank of China Ltd. According to Reuters, BlackRock and CCB  have only internally announced the arrangement so far.

Furthermore, BlackRock and Temasek will own a majority stake in the local venture with CCB.

BlackRock-Temasek-CCB: Opportunity in China

Foreign wealth managers find the vast distribution networks owned by Chinese banks very attractive. Further, the scope to offer new financial products to the Chinese investing public through joint ventures is also a powerful lure.

“Foreign investors have long required greater access to China’s market, so we expanded that access for them first,” a China Banking and Insurance Regulatory Commission (CBIRC) regulator overseeing the wealth management industry told Reuters.

Other foreign asset management firms are also in talks with Chinese banks to set up wealth management joint ventures. These could be similar to the one planned by BlackRock, Temasek, and CCB.

In April, China plans to do away with ownership rules in mutual fund businesses.

Related Story: Alternative Investments: As China Liberalises, Amundi Wins Joint Venture Approval                                                   

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