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BlackRock, Temasek said to be in talks on JV in China

New York

TEMASEK Holdings and BlackRock are said to be in discussions to start an asset management business in China along with one of the country's biggest banks.

Singapore's state investor and the world's largest asset manager have entered a non-binding agreement with China Construction Bank Corp to take a majority stake in the new unit, according to a person familiar with the matter.

The arrangement, laid out in a memorandum of understanding between the investment companies and CCB's wealth management arm, would see the firms develop and distribute products for local Chinese investors.

Any deal would be subject to regulatory approval. It's the latest step by overseas companies to tap into China's financial opening, the two-year-old policy of improving access for foreign firms to the country's capital markets and investors.

It's the first arrangement of its kind for BlackRock, and comes as the New York-based firm seeks opportunities in China.

The company's chief executive officer Larry Fink wants his firm to become one of China's leading asset managers, and views the world's second-biggest economy as one of BlackRock's largest avenues for growth, he said in April.

About 7 per cent of BlackRock's assets under management came from the Asia-Pacific region at the end of 2018.

Recent regulatory changes in China to increase access to its financial system allow foreign firms to hold 51 per cent of a wealth-management joint venture with a bank.

Despite China's increasing financial openness, US firms including BlackRock have already faced challenges gathering assets for what is locally known as private securities funds.

Other foreign financial firms are striking joint ventures in China. UBS Group, JPMorgan Chase & Co and Nomura Holdings all won regulatory approval for majority control of their local securities joint ventures.

BlackRock's efforts to expand in China have also led to preliminary discussions with Tencent Holdings over the past year, as it explores ways to make its tools for investment portfolios available in that region. BLOOMBERG