BlackRock is said to weigh setting up mutual-funds unit in China

[BEIJING] BlackRock Inc is considering seeking a mutual-funds license in China, people with knowledge of the matter said, as the world's largest asset manager pursues ways to expand and exert more control over its operations in the nation.

As part of the plan, BlackRock is in talks to sell its 16.5 per cent stake in Bank of China Investment Management Co., the people said. The firm has also been in discussions with the China Securities Regulatory Commission about applying for its own license and setting up a majority-controlled joint venture, two of the people said, asking not to be named because the deliberations are private.

Beijing announced a little over a year ago that foreign firms would be allowed to take control of local joint ventures across sectors from securities to life insurance, part of President Xi Jinping's plans to open up financial markets. In April, the securities regulator said overseas companies could start applying for majority control of mutual-fund firms, with no revision to existing rules necessary.

Officials at BlackRock, CSRC and Bank of China didn't immediately respond to emails and calls seeking comment.

Fink's 'Hopes'

Cracking China represents the ultimate prize for money managers, with a market that's surged along with rising wealth in the world's most-populous nation. BlackRock Chairman and Chief Executive Officer Larry Fink said Thursday in New York that the firm was "eager" to help continue to build China's asset management industry, and hoped to be a strong company in the nation.

He also told an event organized by the National Committee on United States-China Relations that he expects BlackRock will "earn" a license in China, without specifying what type of permit that might be.

China's mutual fund market has grown sixfold since 2011 to about 13.4 trillion yuan (S$2.61 trillion) in assets under management as of Sept. 30, according to the Asset Management Association of China.

BlackRock has a relatively long history in Asia's biggest economy, taking a stake in Bank of China Investment Management in 2006. It was granted a private-funds license in 2017 and now has two onshore China funds aimed at qualified institutions and high net worth individuals.

Bank of China Ltd. owns the rest of BOCIM. BlackRock doesn't expect the Chinese lender would agree to sell it a controlling stake in the unit, one of the people said.

BlackRock was earlier this month said to be in talks to buy a majority stake in China International Capital Corp.'s mutual-funds unit. The firm is still keeping that option open, one of the people said. Still, it is preparing to submit a mutual-fund license application in the next few months, this person said.

BLOOMBERG