Chinese fintech company Ant Financial Services has formed a joint venture with a Shanghai unit of US-based asset management firm Vanguard, government records showed.
The joint venture was registered with an initial investment of 20 million yuan ($2.9m) and will focus on services including investment consulting, according to the records. Ant Financial will control the company with a 51% stake, while the Vanguard subsidiary will hold the rest of the new enterprise. Huang Hao, president of digital finance business group at Ant Financial, is listed as its legal representative.
The Vanguard-Ant joint venture is expected to target the "mass affluent" sector of the market instead of the rich investors serviced by established wealth managers, such as Noah and CreditEase.
Vanguard, with $5.2trn in global assets, is one of the world's top providers of passive investment products, although it only has a modest presence in China.
International asset managers are racing to strengthen their operations in mainland China, where the pool of assets is forecast to increase from $5.3tn to $9.3tn as early as 2023, according to Morgan Stanley and Oliver Wyman, the consultancy.
Ant Financial, an affiliate of Chinese e-commerce giant Alibaba Group Holding Ltd, currently operates Yu'ebao - the world's largest money market fund. The company, which holds 1.13 trillion yuan ($168.2bn) in net assets as of 2018-end, was launched as a third-party online payment provider.
It has since branched out into consumer finance, and offers loans for small businesses, consumer credit, and other services.
The aim of the new joint venture, some experts believe, is for Vanguard to obtain a mutual fund license in China. Chinese regulators have not officially started issuing licenses to wholly foreign-owned enterprises like Vanguard.
Ant Financial, which has grown to become the world's most valuable unicorn in fewer than five years, has attracted the attention of foreign financial service providers. Last September, US-based insurance provider Fidelity Guaranty & Life announced a research partnership with Ant Financial.