CICC eyes retail brokerage
(7 November 2016 – Hong Kong) China International Capital Corp (CICC) has announced plans to acquire China Investment Securities for 16.7 billion yuan (A$3.24 billion) as the country's leading investment bank seeks to increase its presence in the retail brokerage space.
"The proposed acquisition will enhance the overall competitiveness of the wealth management business of the enlarged group and further promote the development of other businesses, including the investment banking business," CICC said in a statement.
Unlisted China Investment Securities had assets of 96.6 billion yuan, while revenue and other income totalled 12.48 billion yuan in 2015, according to the CICC statement.
Discussions between CICC and China Investment Securities have been underway for a couple of months, said the sources, who declined to be identified as the talks are confidential.
The deal, viewed by analysts as complementary for the two firms, will give investment banking-focused CICC the means to boost its retail business in a country where frequent trading by mom-and-pop investors has boosted revenues at brokerages.
Beijing-based CICC, the oldest investment bank in China, has played a crucial role in helping many large Chinese state-owned enterprises list in Hong Kong.
CICC is also recognised for its strong performance in major cross-border mergers and acquisitions by Chinese firms. It was second behind Morgan Stanley for China-related M&A last year with 11 percent of the market.
But its retail stock broking business is relatively small compared to rivals. China Investment Securities ranked 17th by operating revenue among China stock brokers last year with CICC six places below, according to data from the Securities Association of China.
Shenzhen-based China Investment Securities operates around 200 retail branches across China compared with CICC's 20.
CICC, which was founded in 1995 by China Construction Bank, Singapore sovereign investment fund GIC and Morgan Stanley as China's first Sino-foreign investment bank, was led for a decade by Levin Zhu, the princeling son of former Chinese Premier Zhu Rongji.
Zhu resigned as CEO in 2014.
Morgan Stanley sold its 34.3 percent CICC stake in 2010 to a consortium including KKR & Co and TPG Capital. Central Huijin Investment Ltd, part of sovereign wealth fund China Investment Corp, owns 28.45 percent of CICC.
"The proposed acquisition will enhance the overall competitiveness of the wealth management business of the enlarged group and further promote the development of other businesses, including the investment banking business," CICC said in a statement.
Unlisted China Investment Securities had assets of 96.6 billion yuan, while revenue and other income totalled 12.48 billion yuan in 2015, according to the CICC statement.
Discussions between CICC and China Investment Securities have been underway for a couple of months, said the sources, who declined to be identified as the talks are confidential.
The deal, viewed by analysts as complementary for the two firms, will give investment banking-focused CICC the means to boost its retail business in a country where frequent trading by mom-and-pop investors has boosted revenues at brokerages.
Beijing-based CICC, the oldest investment bank in China, has played a crucial role in helping many large Chinese state-owned enterprises list in Hong Kong.
CICC is also recognised for its strong performance in major cross-border mergers and acquisitions by Chinese firms. It was second behind Morgan Stanley for China-related M&A last year with 11 percent of the market.
But its retail stock broking business is relatively small compared to rivals. China Investment Securities ranked 17th by operating revenue among China stock brokers last year with CICC six places below, according to data from the Securities Association of China.
Shenzhen-based China Investment Securities operates around 200 retail branches across China compared with CICC's 20.
CICC, which was founded in 1995 by China Construction Bank, Singapore sovereign investment fund GIC and Morgan Stanley as China's first Sino-foreign investment bank, was led for a decade by Levin Zhu, the princeling son of former Chinese Premier Zhu Rongji.
Zhu resigned as CEO in 2014.
Morgan Stanley sold its 34.3 percent CICC stake in 2010 to a consortium including KKR & Co and TPG Capital. Central Huijin Investment Ltd, part of sovereign wealth fund China Investment Corp, owns 28.45 percent of CICC.
Subscribe