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 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 and Och-Ziff Capital Management
Group. 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Although the Chinese authorities do not publish information on QDLP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.
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"It will have repercussions, it will mean lower growth rates but I
think the Chinese government knows that and accepts that as the
natural consequence of this desirable reform effort,” he added,
referring to China's reform efforts.
BlackRock was awarded two Renminbi Qualified Foreign Institutional
Investor (RQFII) licenses last year, which allows the company to
purchase stocks and bonds in China. It also has a stake in a joint
venture with Bank of China Investment Management.
Unveiled in 2012, the QDLP licence is designed to allow foreign
alternative asset managers, namely hedge funds, to raise funds
onshore to invest offshore. The first round of licenses was granted
in 2013.
"This is a very significant development for BlackRock from a
branding and marketing perspective, as it allows them to raise funds
in China in their own name directly for the first time," said
Stephen Baron, executive director at Shanghai-based investment
consultancy Z-Ben Advisors.
"It also very important for the scheme itself, as it signals that
the authorities are broadening out QDLP."
(Reporting by Simon Webb in BANGKOK and Michelle Price in HONG KONG;
Editing by Denny Thomas and Kenneth Maxwell)
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