BlackRock steps up China drive with new license to raise onshore funds

Tue Jul 21, 2015 6:23am EDT
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By Simon Webb and Michelle Price

BANGKOK/HONG KONG (Reuters) - U.S. fund giant BlackRock Inc (BLK.N: Quote) has won a special new licence that will allow it to raise funds in China directly for the first time, a senior executive told Reuters, paving the way for the world's largest money manager to expand in the mainland.

Speaking in an interview in Bangkok this week, BlackRock vice chairman Philipp Hildebrand, said his company was granted a so-called Qualified Domestic Limited Partnership (QDLP) license "reasonably recently". He said BlackRock, with about $4.5 trillion in assets, is committed to China and will "do whatever that entails" to provide asset management services there.

At a time when China's stock markets are gingerly recovering from their worst ever sell-off, the new licence allows BlackRock, which already has some operations in the country, greater freedom to raise funds onshore from domestic high net worth Chinese investors through a wholly owned fund management company.

BlackRock now joins a handful of other global funds with QDLP licenses including, Man Group Plc (EMG.L: Quote) and Och-Ziff Capital Management Group (OZM.N: Quote). Amid Beijing's extraordinary measures to halt its markets slide, some questioned the second-largest economy in the world's commitment to opening up capital markets.

Although the Chinese authorities do not publish information on QDLP licenses, BlackRock is among the first traditional asset managers to receive such a license, according to people familiar with the matter. Hildebrand declined to discuss targets for BlackRock's business in China.

"We also recognize that it's a long-term proposition and we're ready to stay for the duration," said Hildebrand. "I think we've shown to the authorities and to the market that we're there."

Beijing controls access to its market tightly. Foreign asset managers that wish to distribute investment products generally have to operate on the ground through minority-owned joint ventures with domestic firms, although regulators are gradually loosening the reins.

Hildebrand, who was in the Thai capital to address a Bank of Thailand policy forum, said he was not concerned by short-term volatility, but by whether China remains committed to its reform agenda.   Continued...

The BlackRock logo is seen outside of its offices in New York January 18, 2012.  
REUTERS/Shannon Stapleton