Canada's BMO is expanding its wealth management presence in China with the acquisition of a significant interest in one of the country's largest state-owned enterprises.

COFCO Trust, a subsidiary of Chinese conglomerate COFCO Group, has agreed to sell a 19.99 per cent stake in itself to the Canadian asset manager for an undisclosed sum. COFCO Trust, established in 2009, records some RMB36 billion ($5.7 billion) in assets under management as of 31 December 2011. The stake is the ceiling amount a foreign company can hold in a Chinese firm.

The acquisition leverages BMO's North American wealth management and capital markets experience in the development of COFCO Trust's own wealth management offering, the company said in a statement. COFCO Trust provides a range of wealth products and services directly or via third parties.

BMO currently has investment management partnerships with Asian asset management firms Fullgoal Fund Management in Shanghai and Lloyd George Management in Hong Kong. It also operates a subsidiary bank, Bank of Montreal (China), in addition to branches in Hong Kong and Taipei.

"Since regulatory changes were instituted in 2007, trust companies have become an increasingly important provider of wealth management products in China. This is a natural extension of our Asia growth strategy," commented Wu Xiaohui, chief financial officer of COFCO Group and chairman of COFCO Trust.

The deal is still subject to the approval of the China Banking Regulatory Commission, the Office of the Superintendent of Financial Institutions of Canada and other regulatory bodies.