Goldman Sachs is in discussion with its domestic Chinese partners to launch a majority-owned asset management units onshore.

China’s financial sector floodgates have opened and global groups continue to rush in and tap into the $45 trillion market. For asset managers, $13 trillion of investable household assets are undoubtedly an attractive market to target with Goldman Sachs and BlackRock becoming the latest to up ownership of their local business. 

Goldman Sachs is in talks with ICBC’s wealth arm to set up wealth management joint venture with the American lender holding 51 percent ownership, according to a «Caixin» report citing unnamed sources which said discussions were still in a «very initial stage». This follows its application to take majority control of its China-based securities venture, Goldman Sachs Gao Hua Securities.

In addition, the BlackRock-Temasek-CCB joint venture will also involve the latter’s wealth management arm while the former two foreign investors seek a 60 percent stake, pending regulatory approval, the report added.

Asset Management Opportunity

China continues to demonstrate its commitment to opening its financial industry for foreign participation. Following last year’s announcement to eliminate ownership caps by April 2020, it reaffirmed the move in the latest phase-one trade deal and stressed the inclusion of wholly U.S.-owned entities to participate in its securities, fund management and futures industries. 

A colossal household asset pool aside, demand is also expected from foreign asset managers in China’s distressed asset market which has been gaining headlines after a record year of defaults which totaled $18.6 billion in 2019, according to Fitch. The recent U.S.-China trade agreement will also allow access to this market of non-performing loans directly from Chinese banks beginning at the provincial level. 

Earlier this week, American rival J.P. Morgan was reportedly seeking full ownership of its China-based fund management joint venture after having already acquired a 51 percent majority stake last year.