Banking News
- Credit Suisse, Founder to form venture
Date: 11-Dec-2007 Sources: (Shenzhen Daily)
CREDIT Suisse Group has reached a deal to form an investment-banking joint venture in China, which could portend greater access for foreign companies to the nation's booming but largely closed financial markets.
If approved by Chinese regulators, the Swiss bank's proposed venture with Founder Group, a Beijing-based conglomerate, would be among the first to take advantage of a long-promised opening.
The China Securities Regulatory Commission has promised to lift its moratorium on approving new joint ventures with foreign securities firms this year.
The partnership between Credit Suisse and Founder was announced to Credit Suisse employees in an internal memo Friday.
'The strategic relationship between Credit Suisse and Founder Group includes a proposed joint venture in A-share underwriting, corporate advisory, and research,'the memo reads.
The joint venture, if it comes through, would be a prize for Paul Calello, 46 years old, who has been pursuing such a deal since becoming the bank's Asian-Pacific chief executive in 2002.
He was named chief executive of the investment bank earlier this year and is due to end his Asian responsibilities at the end of the month.
During his tenure, Credit Suisse won roles on the world's largest stock deals including the US$21.9 billion initial public offering of stock in Industrial & Commercial Bank of China Ltd., and the US$9.2 billion IPO of China Construction Bank Corp.
'We've been looking for the right opportunity to be able to participate in the domestic market,'said Calello. 'More and more Chinese companies are looking to do both onshore and offshore capital-raising.'
Stock underwriting is an increasingly lucrative business in China, as a market surge has encouraged the government to list more and bigger companies. Through the end of November, IPOs on the domestic markets have raised US$53.56 billion, according to Thomson Financial, putting the Shanghai Stock Exchange at the top of the IPO charts globally.
With domestic firms handling almost all offerings for A shares, the urgency for Wall Street investment banks to get access to the market has been growing. They still handle most mainland IPOs in Hong Kong, but such deals have raised only US$22.95 billion so far this year, down 32 percent from the same period in 2006, according to Thomson Financial.
Wall Street firms have spent years on the often-tortuous road to setting up operations in China. Since the 1990s, Morgan Stanley has owned about 34 percent of China International Capital Corp., which dominates underwriting in China. But the U.S. firm has in recent years become a passive investor, and has been looking for another domestic partner.
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