Allianz SE is in talks with Chinese banks to establish a majority-owned asset management venture in the world’s second-largest economy, according to two people with direct knowledge of the matter, with the goal of tapping a $4.3 trillion market for wealth products.
According to the people, Allianz Global Investors, the primary asset management division of the German insurer, has been in talks with lenders including Industrial Bank, China CITIC Bank, and others over the past few months.
AllianzGI is the latest foreign asset manager to seek a piece of China’s lucrative wealth management market.
BlackRock, as well as divisions of Goldman Sachs and Barclays, have found or are trying to find local partners to enter this market after China 2019 allowed foreign companies to set up majority-owned wealth management joint ventures with local banks.
However, the rush has raised questions about whether there are sufficient qualified local partners for the asset managers to collaborate with.
One of the sources added that at least one more foreign asset manager is also in joint venture discussions with CITIC Bank. “The competition to win over a local bank intensified this year as not many large banks are left for foreign firms to grab,” the source said.
Although declining to discuss specific plans, AllianzGI stated that it is committed to the China market.
Due to their lack of authorization to speak to the media, both sources declined to be identified.
An employee of Industrial Bank’s news department claimed he was unaware of the discussions. For a comment, Citic Bank could not be reached right away.
As of the end of 2021, the wealth management divisions of the two banks had assets worth 1.8 trillion yuan ($263.20 billion) and 1.4 trillion yuan, respectively.
UNIT FOR FUND MANAGEMENT
The stuttering Chinese economy that just avoided contracting in the second quarter is the backdrop for Allianz’s China expansion plan. Consumer and business confidence in the nation was severely damaged by widespread COVID-19 lockdowns and a property crisis, which had a negative impact on wealth creation.
However, Western asset managers are placing their money on China’s financial sector’s long-term growth prospects.
According to the two people, AllianzGI, which has 578 billion euros ($574.5 billion) in assets under management, is also moving forward with a different plan to establish a fully owned fund management company in China.
One of the sources said that it has hired Mckinsey & Company to conduct feasibility studies for this project.
According to official statistics, China’s fund management market is worth $3.7 trillion.
Currently, the insurer owns a 49% stake in a joint venture for fund management with a division of China Pacific Insurance (601601.SS). According to one of the sources, it failed to buy out the partner and instead decided to create a new, wholly owned company.
Reuters contacted Allianz for comment, but they didn’t get back to them right away. Mckinsey opted not to respond.
According to the people, AllianzGI recently started hiring operational staff in order to set up the fully-owned fund management unit.
In addition to the joint venture for fund management already in place, Allianz also operates life insurance and insurance asset management in China, both of which received regulatory approval in July of last year.
