Pioneer Sino-foreign joint venture adds brokerage, asset management services to meet competition China's earliest Sino-foreign joint venture investment bank, China International Capital Corporation (CICC), plans to raise fresh capital to support an expanded business scope amid intensifying competition. The plan was tabled as the Beijing-based firm, formerly led by China Construction Bank (CCB) and Morgan Stanley, celebrated its tenth anniversary this week and branched out from its traditional business of providing investment banking services to state-owned giants, to brokerage and asset management. 'The new business calls for the recruitment of more professional staff and talent and additional capital to support our trading activities,' CICC's new chairman, Jesse Wang Jianxi, told a press conference in Beijing yesterday. Despite previous reports of rifts between the United States investment bank and the Chinese managers of CICC, Morgan Stanley, a 34.3 per cent shareholder of CICC, was quick to profess support yesterday. 'In terms of CICC's future, we are absolutely there to support it in whatever way we can,' said Alasdair Morrison, Morgan Stanley's Asia chief executive. 'If CICC needs additional capital to grow, we would be happy to play our part.' China Jianyin Investment, a wholly state-owned company spun off from CCB during the financial restructuring of China's third-largest lender, has inherited CCB's 43.35 per cent stake in CICC. Since its establishment in 1995 with special permission from the Chinese government, long before a 2001 regulation allowed Sino-foreign joint venture securities firms, CICC has participated in the financial restructuring and overseas share offerings of 15 large state-owned companies which raised close to US$40 billion between them. It also helped arrange 13 blue-chip companies' domestic share offerings which fetched a combined 66 billion yuan and 35 bond offerings that raised 150 billion. Chief executive Levin Zhu Yunlai, the son of former Chinese premier Zhu Rongji, is widely seen as instrumental in helping CICC secure those high-profile mandates of mega privatisation deals. However, CICC is now facing growing competition from domestic, foreign and Sino-foreign joint venture players such as CLSA-invested China Euro Securities and Goldman Sachs-backed Goldman Sachs Gao Hua Securities. Mega privatisation deals that have driven the China IPO scene for over 10 years are thinning out while the domestic stock market is struggling to recover from a four-year-long bear market. Against this backdrop, CICC is moving away from its traditional reliance on investment banking services to extend business scope. Though joint venture securities firms approved under the 2001 regulation are still banned from offering A-share brokerage services, CICC won special approval to do so in December 2001. This month, it became the first mainland securities firm to be licensed to provide foreign currency asset management services for Chinese companies to enhance yield and diversify risks of a growing amount of foreign currencies the government is now allowing them to retain. Chinese firms have US$60 billion parked in bank deposits. Mr Wang said CICC was considering stock options and other incentives to motivate its employees.