CITIC Securities Company Ltd is about to complete the acquisition of Credit Agricole’s Hong Kong-based brokerage for US$1.25 billion.
CITIC is to acquire a close to 20% stake in CLSA Asia Pacific Markets for US$310 million in cash. A follow on agreement will see CITIC buy the remaining 80% for $941 million, but subject to the approval of regulators and CLSA staff. The deal, which has taken more than two years to negotiate, will become the first acquisition of a foreign securities house by a Chinese institution.
State-owned CITIC is the largest among China's investment banks as measured by total assets, total equity, total revenue and profit in 2011 CLSA, one of Asia's largest and most highly rated independent equity brokers and financial-services groups, is 65% owned by Crédit Agricole, France’s largest retail-banking group, with the remainder held by staff. For CITIC the deal will bring a vastly improved distribution network through which to sell equity and raise capital overseas for its Chinese clients. Wang Dongming, chairman of CITIC, said the investment would increase the products from within China his group is able to offer to international clients and to investment clients in mainland China. Jonathan Slone, chief executive of CLSA, said the company would maintain its character under Chinese ownership. “Having CITIC as a shareholder will allow CLSA to broaden our product offering and global expertise while maintaining our unique and successful position as a content driven independent agency broker,” he said. The two companies added that they had signed a management agreement that would ensure CLSA’s ability to operate on its own terms. In 2011, CITIC was ranked No.1 in China in the investment banking business as measured by the total amount of equity and debt underwritten.
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