Securities arm set to merge Citic units in HK
Citic Securities, the mainland's biggest listed brokerage, is about to take over part of Hong Kong-based Citic Capital Markets Holdings.
The deal, which is expected to be announced today, also involved the institutional brokerage, investment bank and research house Citic Frontier, a source said.
Citic Capital is a joint-venture brokerage formed four years ago by Citic Pacific and Citic Financial Holdings, the holding company of Citic Ka Wah Bank.
Citic Securities has arranged a handful of mega-deals such as China Yangtze Power's 10 billion yuan A-share initial public offering, Air China's three billion yuan bond sale and a two billion yuan bond issue for the International Finance Corp, the World Bank's private investment arm.
The firm also opened several hundred retail outlets last year in an aggressive expansion to beef up its nationwide coverage against intense competition from foreign players.
Citic Pacific managing director Henry Fan Hung-ling and Citic Securities head Wang Dongming declined to comment yesterday.
The deal may not be large but is strategically important for Citic Securities as it enhances competitiveness and eliminates unnecessary competition within Citic Group.
Whether the transaction will involve a change in the shareholding structure of Citic Capital remains to be seen, but the source said it would lead to Citic Pacific playing down its role in Hong Kong's financial sector in favour of Citic Securities.
'The deal is structured partly for the purpose of streamlining and partly for the sake of convenience. It is easier for a mainland brokerage to squeeze its way into Hong Kong than the foreign interest to gain a foothold in China due to regulatory restrictions,' the source said.
Foreign brokerages can only hold up to 49 per cent of mainland securities firms.
