Swiss private bank Julius Baer’s December move to purchase a 5% share in Chinese wealth manager Jupai Holdings may reflect the growing international ambitions of mainland firms, but it is seen as unlikely to herald a wave of similar M&A activity in China.

For one thing, local Chinese firms benefit less from selling stakes than the foreign bank buying them, said Kenny Lam, chief executive of Shanghai-based wealth manager Noah Holdings.

“It makes a lot of sense for the buyer because the latter gains access to an onshore China distribution channel,” noted Lam. “Buying a stake provides it access to onshore market knowledge in China and a local distribution platform. From their perspective, this is great. But I have questions on the benefit of this to the seller.”

Distribution channels above all need to strengthen their product manufacturing capabilities, noted Lam. “I am not clear on what is to be gained when a distribution channel sells a portion of its equity to another distribution channel.”

Rather, the trend in high-end wealth management is likely to be towards cross-border partnerships with local independent firms, suggests Chris Powers, director at Shanghai-based Z-Ben Advisors.

In any case, foreign firms – such as BNY Mellon and State Street Global Advisors – have recently been divesting their stakes in joint ventures, Powers noted.

Rather, they are looking for partnerships with local firms, but through a business – such as a wholly foreign-owned entity – that the foreign party completely controls. Several asset managers, such as AberdeenUBS and Franklin Templeton, are moving in this direction.

Interest to tap China’s onshore wealth management market is growing fast – Standard Chartered and UBS are two foreign firms that are increasingly active on this front – and the fund distribution landscape is evolving rapidly.

Various new players have been getting in on the action in the past year or two, including peer-to-peer lending platforms and other electronic distribution channels. Moreover, the expansion of cross-border investment programmes is having a major impact.

The Chinese market has traditionally been dominated by banks, said Powers, but over the past two to three years independent financial advisers and third-party platforms have grown in prominence.

“I don’t think anyone is extremely optimistic on the ‘big four’ banks, whether [in respect of] extending credit or distributing financial products,” said Powers. It is the smaller or specialised players recording stronger growth, he added.

Meanwhile, the Julius Baer-Jupai deal highlights the growing ambition of mainland wealth managers.

Jupai sees M&A as part of its international expansion strategy. It wants to invest in or acquire companies that can help it provide clients with “comprehensive” wealth and asset management services, give it access to new markets or expand its product range, said Yao Weishi, chief operating officer.

He cited examples of deals that have boosted Jupai’s capabilities: the firm’s acquisition of property services company E-House’s real estate asset management unit in April last year; Chinese internet firm Sina Corp, which has a stake in Jupai, has provided internet investment opportunities; and mainland financial services firm Zero2IPO, another Jupai stakeholder, has brought in private equity and venture capital resources.

As for Julius Baer, Jupai said it would be able to tap the Swiss bank’s expertise in offshore investments. In the third quarter of last year, offshore products comprised just 5% of the wealth management products sold, but the firm wants to add more to meet client demand. Yao said there were no constraints on asset classes.

Jupai is following a similar route to Noah by listing on the New York Stock Exchange last July (Noah did so in 2010). Jupai is also setting up a Hong Kong office, as Noah did. The new office will open in the first quarter of this year to help Jupai bring in more products from the US, Hong Kong and Singapore to meet demand from mainland investors.

The branch will serve as “the first filter” for product selection, noted Yao, and the firm is adding more selection and due diligence staff.

And Jupai's business is growing fast. For the first nine months of 2015, it sold wealth management products worth a total of $3.06 billion, double the $1.52 billion in the same period the year before. Total AUM stood at $1.5 billion as of September 30, 2015, a 374% increase from the year before.