Allianz SE is in talks with Chinese banks to set up a majority-owned asset management business in the world’s second-largest economy, two people with direct knowledge of the matter said, aiming to tap into a $4.3 trillion market for wealth products.
The German insurer’s main asset management subsidiary, Allianz Global Investors (AllianzGI), has had discussions over the past few months with Industrial Bank and China CITIC Bank, among other lenders, the people said.
AllianzGI is the latest foreign asset manager to seek a slice of China’s lucrative wealth management market.
After China in 2019 allowed foreign companies to form majority-owned wealth management joint ventures with the wealth management units of local banks, BlackRock, as well as units of Goldman Sachs and Barclays have found or are working to find local partners to engage in this activity.
The rush, however, has led to questions about whether there are enough suitable local partners that asset managers could partner with.
“Competition to win a local bank has intensified this year as there are not many big banks left for foreign companies to grab,” one of the people said, adding that at least one other asset manager Abroad is also in joint venture talks with CITIC Bank. .
AllianzGI said it was committed to the Chinese market but declined to comment on specific plans.
Both sources declined to be named as they were not authorized to speak to the media.
An Industrial Bank news department official said he was unaware of the talks. Citic Bank could not immediately be reached for comment.
The two banks’ wealth management units held 1.8 trillion yuan ($263.20 billion) and 1.4 trillion yuan in assets respectively at the end of 2021.
Funds Management Unit
Allianz’s China expansion plan comes against the backdrop of a faltering Chinese economy that narrowly avoided contracting in the second quarter. Widespread COVID-19 shutdowns and a real estate crisis have weighed heavily on consumer and business confidence in the country, hurting wealth creation.
Western asset managers, however, are betting on the long-term growth prospects of China’s financial sector.
AllianzGI, which has 578 billion euros ($574.5 billion) in assets under management, is also pursuing a separate plan to create a wholly owned fund management business in China, the two people said.
He has hired Mckinsey & Co. for feasibility studies for this project, one of the sources said.
The Chinese fund management market is worth $3.7 trillion, according to to official data.
The insurer currently has a 49% stake in a fund management joint venture with a unit of China Pacific Insurance 601601.SS. One of the sources said his plan to set up a separate, wholly-owned business comes after he failed to buy out the partner.
Allianz did not immediately respond to Reuters’ request for comment. McKinsey declined to comment.
AllianzGI has in recent months begun hiring operational staff to set up the wholly owned fund management unit, the sources said.
Besides the existing fund management joint venture, Allianz’s other businesses in China include life insurance and insurance asset management which received regulatory approval in July last year.
($1 = 6.8388 yuan)
(Reporting by Samuel Shen in Shanghai and Selena Li in Hong Kong; editing by Sumeet Chatterjee and Muralikumar Anantharaman)
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