Wall Street is rushing to secure leadership positions in China’s fast-growing investment market.
China has granted initial approval for
Goldman Sachs Group
(ticker: GS) to acquire a majority stake in an asset management partnership with the
Industrial and Commercial Bank of China
The China Banking and Insurance Regulatory Commission will allow Goldman Sachs Asset Management to own 51% of the company, with ICBC Wealth Management holding the rest, the two companies said in public statements Tuesday.
The collaboration marks the third wealth management company in China to give majority control to a foreign entity. 1st French asset manager,
(AMUN: France), started its operations with
bank of chinaof
(3988.Hong Kong) wealth management subsidiary in September, the first holding 50.1%.
Two weeks ago the money management giant
(BLK) obtained approval for a 50.1% stake in a wealth management company with
China Construction Bank
(939.Hong Kong) and the Singapore Temasek State Fund.
(JPM) bought a minority stake in a
China Merchants Bank
(3968.Hong Kong) Wealth management unit.
The latest partnership will leverage Goldman’s investment and risk management expertise, as well as ICBC’s brand recognition in China and “an unrivaled institutional and retail investor network,” said Goldman in a statement emailed to Barron’s.
Meanwhile, state-owned ICBC – the world’s largest commercial lender in terms of assets, according to S&P Global Market Intelligence – said in a deposit that its wealth management unit “serves as a central platform and flagship brand in the bank’s in-depth development of its mega asset management business”.
In a nod to Chinese regulators who are investigating some of the country’s largest financial and technology companies over concerns of economic instability and monopoly practices, the ICBC stressed that the merger will strengthen “its overall ability to serve the country. real economy ”.
Goldman reached an agreement to acquire 100% control of its separate mainland Chinese securities joint venture in December, the Wall Street Journal reported. This would give him full ownership of a partnership with Beijing Gao Hua Securities that began in 2004, although Goldman has had offices in China since 1994.
JPMorgan and BlackRock have each announced their intention to acquire full ownership of their separate fund-of-assets business in China.
According to Goldman Sachs Global Investment Research, the scale of investable assets of Chinese households will reach about 450 trillion yuan ($ 70 trillion) by 2030, “of which about 60% are expected to be invested in types other than deposits such as funds and wealth management products. “
“China’s wealth management industry has grown thanks to increased household wealth and continued financial market reform,” said Tuan Lam, head of client activities for Asia. Pacific at Goldman Sachs Asset Management, according to Chinese state media.
In a January report, KPMG International noted several definition of characteristics that sets the Chinese asset management industry apart from others. “Retail distribution is essential, digital is the way business is done, regulatory developments can be fast and difficult to predict, and in the battle of mindsets, trading dominates portfolio management,” he said. he declares.
ICBC’s Hong Kong-traded shares have risen nearly 1% this year. Goldman Sachs New York-traded shares have been on a bullish momentum since November, hitting a 52-week high on May 10, although its share price fell more than 1% after ICBC’s announcement. The stock has increased by around 40% so far this year.
Tanner Brown covers China for Barron’s and MarketWatch.