A major British investment firm is withdrawing from China’s massive fund management market, marking the first such exit since foreign companies were allowed to operate independently in the country.
Three sources familiar with the situation report that Schroders has struck an agreement to transfer its investment products to Neuberger Berman as part of its departure from Chinese operations. The decision follows shareholder approval last month of a massive 9.9 billion pound ($13.2 billion) sale of the historic London-based investment house to American rival Nuveen, creating what would become one of the globe’s largest active fund management companies.
Neuberger’s Chinese subsidiary will assume control of investment products previously managed by Shanghai-based Schroders Fund Management (China), which began operations in 2023, according to the sources.
The financial terms of the transfer agreement have not been disclosed. Sources indicate that Schroders is also looking for buyers interested in acquiring the fund management unit’s operating license, which would provide immediate access to China’s $5.6 trillion investment market. South Korean company Mirae Asset Financial Group is reportedly among the potential purchasers in discussions.
All sources requested anonymity because they lack authorization to discuss the matter publicly. Representatives from Schroders and Neuberger declined to provide statements, while Mirae did not respond to requests for comment.
Schroders received Chinese regulatory permission to establish its independent mutual fund operation in January 2023, during a period when Beijing was rapidly expanding foreign access to its multi-trillion-dollar financial sector.
The Chinese unit oversaw 1.7 billion yuan ($249.89 million) in mutual fund assets through the end of March, according to recent filings. This represents a small portion of the parent company’s $1.1 trillion in worldwide assets.
The exit will not impact Schroders’ two remaining Chinese partnerships, sources confirmed. These include a wealth management venture with state-owned Bank of Communications where Schroders maintains controlling interest, and a minority stake in Bank of Communications Schroders Fund Management.
China began permitting foreign companies to operate independent fund management businesses in 2020, opening the domestic market to global investment giants including BlackRock and Fidelity International. Schroders becomes the first to withdraw after establishing a wholly-owned operation.
London-traded Schroders shares declined 0.3% by 1020 GMT following the news.
