Allianz SE (ALVG.DE) is holding discussions with Chinese lenders to launch a majority-owned asset management venture in the world’s second-biggest economy, two people familiar with the matter said, planning to draw on a $4.3 trillion market for wealth products.
The German insurer’s main asset management arm, Allianz Global Investors (AllianzGI), has been in talks over the last few months with China CITIC Bank (601998.SS) and Industrial Bank (601166.SS), among other lenders, the people said.
AllianzGI is the most recent foreign asset manager to go after a share of China’s lucrative wealth management market.
After China in 2019 authorized foreign companies to launch majority-owned wealth management joint ventures with local banks’ wealth units, BlackRock (BLK.N), along with units of Barclays (BARC.L) and Goldman Sachs (GS.N) have acquired or are working to acquire local partners to rush into this business.
The rush, however, has caused doubts whether there are sufficient local partners for the asset managers to collaborate with.
“The competition to win over a local bank intensified this year as not many large banks are left for foreign firms to grab,” said one of the people, adding that at least one more foreign asset manager is also in joint venture discussions with CITIC Bank.
AllianzGI said it is dedicated to the China market but refused to comment on exact plans. Both the sources refused to be named as they were not allowed to talk to the media.
An official at Industrial Bank’s news department said he’s not familiar with the talks. CITIC Bank could not be reached instantly for comment.
The two banks’ wealth management units held 1.8 trillion yuan ($263.20 billion) and 1.4 trillion yuan worth of assets, respectively, as of the end of last year.
Allianz Has A Fund Management Unit
Allianz’s China expansion plan occurs against the backdrop of a stumbling Chinese economy that barely evaded shrinking in the second quarter. A property crisis and widespread COVID-19 lockdowns heavily damaged business and consumer confidence in the country, impeding wealth creation.
Western asset managers, however, are expecting long-term growth prospects in China’s financial sector.
AllianzGI, which has 578 billion euros ($574.5 billion) in assets under management, is also making progress with a separate plan to set up a wholly owned fund management business in China, said the two people.
It has appointed Mckinsey & Company for feasibility studies for this project, one of the sources said. China’s fund management market is valued at $3.7 trillion, official data showed.
The insurer currently holds a 49% stake in a fund management joint venture with a unit of China Pacific Insurance (601601.SS). One of the sources said its plan to form a separate fully owned business come after its failure to buy out the partner.
Buy Crypto NowAllianz failed to respond promptly to Reuters’ request for comment. Mckinsey refused to comment.
AllianzGI in current months started appointing operational staff in preparation for forming the wholly owned fund management unit, the people said.
Besides the prevailing fund management joint venture, Allianz’s other operations in China include life insurance and insurance asset management which got regulatory approval in July 2021.
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