BlackRock in talks with Tencent to explore China expansion

Photographer: Scott Eells/Bloomberg

BlackRock Inc. has held preliminary discussions with Tencent Holdings Ltd. over the past year, as the world’s largest asset manager takes steps to expand its operations in China.

BlackRock is exploring ways to make its tools for investment portfolios available to the Chinese market. The talks between BlackRock and the Chinese Internet giant are at an early stage and no final decisions have been made, according to a person familiar with the matter.

The New York-based company has held discussions with major Chinese lenders about setting up a joint venture with one of the wealth management units they recently spun off into legally separate entities, Bloomberg previously reported. Chief Executive Officer Larry Fink is counting on China to help drive growth in an increasingly cutthroat global industry.

BlackRock and Tencent have also discussed co-developing a financial software system similar to BlackRock’s Aladdin business, which helps clients manage risk in their portfolios, said the person, who asked not to be named because the matter is private.

Melissa Garville, a spokeswoman for BlackRock, declined to comment. Tencent didn’t immediately respond to a request for comment.

Trump plans

One possible roadblock to the plans would be potential limits on U.S. portfolio flows into China, which Trump administration officials have discussed, Bloomberg reported last week. The options discussed by Trump officials have included forcing a delisting of Chinese companies from U.S. exchanges, imposing limits on investments in Chinese markets by U.S. government pension funds and putting caps on the value of Chinese companies included in indexes managed by U.S. firms.

In an email last week, a spokeswoman for U.S. Treasury Secretary Steven Mnuchin said there were no current plans to stop Chinese companies from listing on U.S. exchanges.

“China’s been a top strategic priority for BlackRock for many years,” said Kyle Sanders, an analyst at Edward Jones. “They haven’t seen a lot of progress there, though. It’s hard to get traction there with the regulatory hurdles.”

BlackRock currently has a license to sell funds to qualified institutions and high-net-worth individuals in China, which boasts an asset management industry worth about $14 trillion. With Chinese leaders pushing ahead with financial-market opening in the face of a trade war with the U.S., overseas fund managers, banks and insurers are making plans to significantly expand onshore operations.

Fink has said Asia is expected to drive 50% of the organic growth in assets under management for the industry over the next five years, largely driven by China. In his annual letter to shareholders earlier this year, he said China is one of the largest future growth opportunities for BlackRock.

The Wall Street Journal earlier reported the talks.

Bloomberg 

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.