New | Citi looking to sell Guangfa bank stake, while Value Partners exits China joint venture
Foreign financials are streamlining their China presence against backdrop of slowing economy and capital markets reform
US banking giant Citi is seeking buyers for its 20 per cent stake in Guangzhou-based Guangfa Bank, while Hong Kong fund manager Value Partners has announced it has exited the 49 per cent stake in its China joint venture Golden Capital Fund Management with a sale to Yunnan Jiutian Investment Enterprises Ltd for 45 million yuan.
Both brands are seeking to streamline their China portfolio and focus on organic growth derived from their own-branded business which have performed strongly against the sagging growth provided by the China strategic holdings.
As capital markets liberalisation in China has stiffened competition, pushing up funding costs and making it difficult for foreign shareholders to rationalise and derive business synergy from such previous strategic holdings.
“Citi no longer needs Guangfa,” an analyst who has followed the industry said, adding the bank’s operations in the mainland “has seen such robust growth organically.”
Citi China...has seen its own revenue expand at a double digit pace
Guangfa’s other majority shareholders Citic Trust and China Life will be the main contenders to take over Citi’s stake, the Wall Street Journal first reported on Friday. The deal has been confirmed by other sources familiar with the matter.