Allianz SE is in talks with Chinese banks to establish a majority-owned asset management venture in the world’s second-largest economy, with the goal of tapping a $4.3 trillion market for wealth products, according to a Reuters report quoting two people with knowledge of the matter.
According to the sources, Allianz Global Investors, the German insurer’s main asset management arm, has been in talks with Industrial Bank and China CITIC Bank, among other lenders, in recent months.
AllianzGI is the most recent foreign asset manager to target China’s lucrative wealth management market.
Following China allowing foreign companies to form majority-owned wealth management joint ventures with local banks’ wealth units in 2019, BlackRock, as well as units of Goldman Sachs and Barclays, have found or are looking for local partners to enter this market.
However, the rush has raised concerns about whether there are enough suitable local partners for 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 the report quoting one of the sources who added that at least one more foreign asset manager is also engaged in talks with CITIC Bank for a possibl;e joint venture.
AllianzGI stated that it is committed to the Chinese market but declined to provide specific plans.
Both sources declined to be identified because they were not authorised to speak with the media.
An Industrial Bank news department official said he was unaware of the talks. Citic Bank could not be reached for comment right away.
As of the end of 2021, the assets of the two banks’ wealth management units totaled 1.8 trillion yuan ($263.20 billion) and 1.4 trillion yuan, respectively.
Allianz’s China expansion strategy comes amid a sluggish Chinese economy that barely escaped contracting in the second quarter. Wide – spread COVID-19 lockdowns and a real estate crisis harmed confidence among consumers and businesses in the country, limiting wealth creation.
Western asset managers, on the other hand, are placing a bet on China’s financial sector’s long-term future growth.
According to the two people, AllianzGI, which manages 578 billion euros ($574.5 billion) in assets, is also moving forward with a separate plan to establish a directly owned fund management company in China. According to one of the sources, it has hired Mckinsey & Company to conduct feasibility studies for this project.
According to official data, China’s fund management market is worth $3.7 trillion.
Currently, the insurer owns 49 per cent of a fund management joint venture with a unit of China Pacific Insurance. According to one of the sources, the company’s plan to establish a separate wholly owned subsidiary stems from its failure to buy out the partner.
Mckinsey did not respond. According to the people, AllianzGI has recently begun hiring operational staff in preparation for the establishment of the wholly owned fund management unit.
In addition to the existing fund management joint venture, Allianz’s other businesses in China include life insurance and insurance asset management, both of which were approved by regulators in July of last year.
(Adapted from Reuters.com)