Exclusive: Abrdn in talks to launch China asset management venture with Citic unit, sources say

HONG KONG, Feb 21 (Reuters) – Abrdn (ABDN.L), is in advanced talks with Citic Bank,  to launch an asset management joint venture in China, two people with knowledge of the matter said, as the British firm looks to bolster its presence in the world’s second-largest economy.

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.

Abrdn, the UK’s second-largest independent asset manager, expects to hold a majority stake in the venture with the rest owned by Citic Bank’s unit Citic Wealth, said the people who declined to be identified as the talks are confidential.

Citic Wealth is China’s third-largest bank-owned wealth management unit with 2 trillion yuan ($275 billion) in assets as of the end of last year.

Regulatory approval for the deal is expected to be sought later this year, said one of the people.

Abrdn declined to comment. Citic Bank, the main banking arm of China’s central government-owned conglomerate Citic Group, did not respond to a Reuters request for comment.

Though abrdn is currently in the midst of a cost-cutting drive, China is an important focus for growth. The British firm also has a 50-50 insurance joint venture in China that was set up in 2003 as well as a private fund unit established in 2015 that was the first of its kind.

Its businesses across Asia-Pacific – including operations in Singapore, Japan and Australia – have 16.5 billion pounds ($21 billion) in assets, 7.8% of its global total.

A successful deal would mark the second asset management business formed by a Chinese bank-owned wealth unit and a British firm. Schroders (SDR.L),  has a majority-owned venture with Bank of Communications (601328.SS), that was launched in 2021.

The sources said abrdn and Citic Bank have been in talks for the last couple of years about either setting up a venture in mainland China or abrdn taking a stake in Citic Wealth.

The discussions gained fresh impetus after high-level economic and financial talks between China and the UK that had been frozen for nearly six years were revived last month, they added.

China’s Foreign Minister Wang Yi also made an official visit to Britain this month for the first time in a decade, with Beijing vowing to work with the UK towards stable bilateral ties and to further cooperate in trade and investment.

China’s wealth industry, which has some $20 trillion in assets under management, has been hit hard by cut-throat competition and a 20% drop in the benchmark CSI300 stock index (.CSi300), between 2022 and 2024.

That put a number of foreign players on the back foot. Last year, Fidelity International cut 500 jobs at one of its China operations while Morgan Stanley (MS.N), also reduced headcount at a Chinese asset management unit, sources have said.

The Chinese stock market, however, has rebounded this year with the index up 23% since Beijing announced stimulus policies last September. The measures have helped as have efforts by President Xi Jinping to boost corporate sentiment, particularly in the tech sector.