ABRDN in Talks to Launch Asset Management Joint Venture with Citic Bank in China
ABRDN, the UK’s second-largest independent asset manager, is in advanced talks with Citic Bank to launch an asset management joint venture in China, according to sources familiar with the matter. The move comes as the British firm seeks to expand its presence in the world’s second-largest economy.
Background
The discussions follow a warming in British-Sino relations and contrast with decisions in recent years by several Western financial institutions to either cut jobs in China or shelve expansion plans on concerns about the health of the Chinese economy and tensions between Beijing and Washington.
Details of the Proposed Joint Venture
The proposed joint venture is expected to be majority-owned by ABRDN, with the remaining stake held by Citic Bank’s wealth management unit, Citic Wealth. Citic Wealth is China’s third-largest bank-owned wealth management unit, with over 2 trillion yuan (S$368 billion) in assets as of the end of last year.
Regulatory Approval
Regulatory approval for the deal is expected to be sought later this year, according to one of the sources.
Reaction from ABRDN and Citic Bank
ABRDN declined to comment, while Citic Bank, the main banking arm of China’s central government-owned conglomerate Citic Group, did not respond to a Reuters request for comment.
Background on ABRDN’s Expansion in China
ABRDN has been focused on China as a key growth market, with the British firm also having a 50-50 insurance joint venture in China that was established in 2003, as well as a private fund unit set up in 2015 that was the first of its kind. The company’s businesses across the Asia-Pacific region, including operations in Singapore, Japan, and Australia, have £16.5 billion (S$28 billion) in assets, accounting for 7.8% of its global total.
Conclusion
The proposed joint venture with Citic Bank would mark the second asset management business formed by a Chinese bank-owned wealth unit and a British firm, following the launch of a majority-owned venture between Schroders and Bank of Communications in 2021. The deal would be a significant development in the Chinese asset management industry, which has been hit hard by cut-throat competition and a 20% drop in the benchmark CSI300 stock index between 2022 and 2024.
FAQs
Q: What is the purpose of the proposed joint venture?
A: The proposed joint venture is aimed at expanding ABRDN’s presence in the Chinese market and tapping into the country’s growing wealth management industry.
Q: Who will own the joint venture?
A: The joint venture is expected to be majority-owned by ABRDN, with the remaining stake held by Citic Bank’s wealth management unit, Citic Wealth.
Q: What is the expected size of the joint venture’s assets?
A: The joint venture is expected to have over 2 trillion yuan (S$368 billion) in assets, making it a significant player in the Chinese asset management industry.
Q: What are the potential benefits of the joint venture?
A: The joint venture could help ABRDN tap into the Chinese market, which is expected to experience significant growth in the coming years. It could also provide ABRDN with access to a larger pool of assets and expertise, enabling the company to expand its offerings and capabilities.
