Schroders gets nod to become 3rd foreign-controlled wealth management venture in China

A Schroders sign is seen outside a building in the City of London March 22, 2013. REUTERS/Toby Melville

China’s regulators have given the go-ahead for the country’s third foreign-controlled wealth management joint venture as the government builds on its pledge to open up the rapidly growing financial sector to overseas investment.

London-based asset management group Schroders PLC has won regulatory approval to set up a majority-owned wealth management venture with its long-time Chinese partner, Bank of Communications Co. Ltd.(BoCom), China’s sixth-largest commercial lender by assets.

The two companies made the announcement in separate statements on Monday. The Shanghai-based company, Schroder BoCom Wealth Management Co. Ltd., will be 51% owned by Schroders, while BoCom Wealth Management Co. Ltd., a wholly-owned subsidiary of BoCom, will own 49%.

“The Chinese market represents a significant opportunity for Schroders, entailing the world’s second and third-largest equity and bond markets respectively,” Schroders CEO Peter Harrison said in a statement. “As a result of our focus on China, we have been able to support both overseas investors looking to diversify into China and Chinese institutions keen to invest in the rest of the world.”

Schroders, which had assets under management of $649.6 billion as of June 2020, follows in the footsteps of Amundi Asset Management, Europe’s largest asset manager. The Paris-based company won approval to set up the first foreign-controlled wealth management joint venture in China in December 2019, just five months after the government announced more market-opening measures in the financial sector, including allowing majority foreign ownership of Chinese mainland-based wealth management firms.

The Shanghai-based venture, which is 55% owned by Amundi and 45% owned by Bank of China Ltd.’s wealth management arm, formally opened for business in September 2020 and so far has launched 12 mutual wealth management products.

In August, the China Banking and Regulatory Commission approved the formation of a second foreign-controlled joint venture between U.S.-based BlackRock Inc., the world’s biggest asset manager, Temasek Holdings Ptd. Ltd., Singapore’s sovereign wealth fund, and China Construction Bank Corp. BlackRock and Temasek jointly own 60% of the venture.

Schroders started its partnership with BoCom back in 2005 when the two companies set up their first joint venture, Bank of Communications Schroder Fund Management Co. Ltd. Schroders launched its first domestic private fund in 2018, investing primarily in the A-share market.

But the British company is also going it alone, taking advantage of the government’s market-opening measures that include allowing foreign financial institutions to set up wholly-owned subsidiaries on the mainland. On Feb. 18 Schroders applied to (link in Chinese) the securities regulator for approval to set up a wholly-owned mutual fund business.

Zhu Liangto also contributed to the article.

This article was first published in Caixin Global.

Singapore Reporter/s

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

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Singapore Reporter/s

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).

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

  • 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.