AMP has become the first foreign institution to sign a memorandum of understanding for a strategic alliance in asset management and pensions with China Life Insurance, the biggest insurer in China.
The deal comes just a week after AMP proposed a joint A$12 billion bid with AXA SA to buy AXA Asia Pacific Holdings. China Life, with total assets of US$16.5 billion and investment assets of US$15.6 billion as at September 30, is the world’s largest listed life insurance company. AMP’s proposal with AXA is to retain the Australian assets only, selling the Asia Pacific business back to AXA’s parent.
“[The] agreement… offers significant potential for AMP to grow its business… in the world’s fastest growing economy, with China’s private pensions market expected to grow to A$1 trillion by the year 2030,” said Craig Dunn, AMP chief executive.
AMP said the Chinese pension market was undergoing a period of major structural change as the authorities made available a broader investment universe to pension funds.
Like Australia, China is also facing a demographic shift, with 31 per cent of its population, or 430 million, forecast to be aged 60 or over by 2050.
“This trend has significant implications for the aged care sector and other areas of social infrastructure, areas in which AMP also has investment expertise,” said Dunn.
China is currently the third largest fund management market in the Asia Pacific region following Japan and Australia, with US$0.4 trillion asset under management. Australia has the highest penetration of asset management products in the Asia Pacific region, with 70 per cent of financial assets managed by asset managers.
“We are focused on building our growing footprint in Asia through AMP Capital’s funds management business. With China Life’s significant scale and leading market position, the partnership is the ideal balance of our mutual strengths and capabilities,” said Dunn.
AMP has had a market presence in China since 1997 and has invested A$350 million on the China A share market through the listed AMP Capital China Growth Fund. AMP Capital Investors is pursuing growth in Asia by sourcing funds and selecting, investing in and managing assets in markets with large pools of investable capital, like China and Japan. At June 30, 5 per cent, close to A$5 billion, of AMPCI’s funds under management were sourced from Asia.
Growth of Asia’s asset management market is driven by high savings rates, emerging middle classes in China and India, massive urbanisation, accelerating household incomes in favourable demographics.