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Blackrock plans to launch private funds in China

Blackrock is applying for a private fund management licence in China with the goal of launching funds for high net worth and institutional clients, according to media reports.
Fund Selector Asia

The firm was planning to set up a wholly foreign-owned enterprise (WFOE) with a private fund management (PFM) licence, said Chen Ting, general manager at Blackrock Overseas Investment Fund Management (Shanghai), as reported in 21st Century Business Herald. The licence will allow Blackrock’s onshore asset management arm to launch domestic-focus funds in China for non-retail investors.

Blackrock, the world’s largest asset manager, secured a Qualified Domestic Limited Partnership (QDLP) type of WFOE in mid-2015. The arrangement allows the firm to raise at most $100m from non-retail investors to buy offshore products.

So far the firm has launched two QDLP funds that invest in overseas health science sector and US property subordinated debt, according to data from Asset Management Association of China (in Chinese).

Blackrock also has a minority stake in Bank of China Investment Management, the 11th largest mutual fund house in China with RMB 250bn ($37bn) of assets under management at the end of March, according to AMAC data.

In applying for a PFM licence, Blackrock is following in the steps of Fidelity and UBS Asset Management.

Fidelity launched a bond fund under the WFOE structure in May. It is planning to launch a second fund in China later this year, according to Bloomberg.

Similarly, UBS AM also has a QDLP WFOE with $100m quota, but merged the WFOEs earlier this year so that it can conduct both the QDLP and PFM businesses. It obtained a PFM licence earlier this month.

Part of the Mark Allen Group.