BlackRock is said to weigh setting up mutual funds unit in China

BlackRock (BLK) is considering seeking a mutual funds license in China, people with knowledge of the matter said, as the world's largest asset manager pursues ways to expand and exert more control over its operations in the nation.

As part of the plan, BlackRock is in talks to sell its 16.5% stake in Bank of China Investment Management Co., the people said. Firm executives also have been in discussions with the China Securities Regulatory Commission about applying for its own license and setting up a majority-controlled joint venture, two of the people said, asking not to be named because the deliberations are private.

Beijing announced a little over a year ago that foreign firms would be allowed to take control of local joint ventures across sectors from securities to life insurance, part of President Xi Jinping's plans to open up financial markets. In April, the securities regulator said overseas companies could start applying for majority control of mutual-fund firms, with no revision to existing rules necessary.

Officials at BlackRock, CSRC and Bank of China didn't immediately respond to emails and calls seeking comment.

China's mutual fund market has grown sixfold since 2011 to about 13.4 trillion yuan ($1.9 trillion) in assets under management as of Sept. 30, according to the Asset Management Association of China.

BlackRock was earlier this month said to be in talks to buy a majority stake in China International Capital Corp.'s mutual funds unit. The firm is still keeping that option open, one of the sources said. Still, it is preparing to submit a mutual fund license application in the next few months, this person said.