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Schroders gets nod for 51%-owned China wealth management joint venture

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Schroder Investment Management has received China’s approval to form a wealth management joint venture with Shanghai-based Bank of Communications that will be majority owned by the UK asset manager.

It is the latest foreign company that has tied up with local firms to tap into China’s growing demand for wealth management solutions since Beijing loosened ownership controls in joint ventures in 2018, allowing foreign companies to be the majority partner.

Schroders and Bank of Communications are already partners in an asset management firm, BOCOM Schroder Fund Management Co, which was set up in 2005. But BOCOM owns 65% of that company, with Schroders holding 30%, and the balance 5% held by another Chinese firm.

The new Schroder BOCOM Wealth Management Co will be 51% owned by Schroders and 49% by Bank of Communications, according to their joint statement.

“As a result of our focus in 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 Group Chief Executive Officer Peter Harrison says in the February 22 statement.

Lieven Debruyne, the company’s global head of distribution, adds that the new tie-up “further demonstrates how our strategic partnership with BOCOM continues to grow and develop”.

“We look forward to being able to support savers in China with innovative investment products which will serve as an alternative to more traditionally focused wealth management offerings which are typically available,” Debruyne says.

French asset manager Amundi SA was the first foreign company to form a wealth management partnership in China after Beijing eased ownership rules, establishing a 55%-owned joint venture with the Bank of China last year.

US asset manager BlackRock Inc. and Singapore state investment company Temasek Holdings won approval last year to form a wealth management joint venture with China Construction Bank. There is as yet no information about the shareholding structure.

London-based Schroders had US$649 billion of total assets as of June 2020.