CICC, dubbed ‘China’s Goldman Sachs’, aims to cash in on slumping global markets, expand overseas
- China’s first investment bank expanded its overseas presence in the aftermath of 2008 financial crisis and aims to do the same this time around
- The company is aiming to become a top-notch investment bank globally
China International Capital Corporation (CICC), the country’s first investment bank, will take advantage of the global downturn caused by the coronavirus to expand overseas and win a larger share of the international market, executives said on Tuesday.
After the last financial crisis in 2008, CICC set up offices in the US, UK and Singapore and managed to hire talent from top international investment banks amid waves of lay-offs in the financial industry. The company intends to do the same this time around, chief executive Huang Zhaohui said during a press conference.
“The economic and financial crisis resulting from the coronavirus outbreak has created an excellent opportunity for us to speed up our global expansion,” said Huang, in his first post-results conference since taking the helm in December.
Overseas business, including new share issuance in the Hong Kong market, accounted for nearly a quarter of CICC’s overall revenue last year. The unfolding coronavirus pandemic globally has led to huge slumps in financial markets around the world, with trillions of dollars worth of market capitalisation wiped out from stocks.
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Huang also stressed CICC’s strategic plan to invest heavily in expanding its manpower, upgrading technology and raising more capital over the next two to three years, as it aims to become a top-notch global investment bank. The company will prioritise market share over employees’ average income, he said, and put revenue growth before return on equity, which is a measurement of profitability.
Sometimes dubbed China’s answer to Goldman Sachs, CICC was founded in 1995 as a joint venture between Morgan Stanley and China Construction Bank. It has over the years sponsored most of the initial public offerings of China’s big state-owned enterprises, and important political elites – including Levin Zhu Yunlai, the son of China’s former premier Zhu Rongji – have served as its chief executive.
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CICC sponsored eight of the 10 biggest IPO deals in China’s A-share market last year, including the 32.7 billion yuan (US$4.6 billion) mega deal of Postal Savings Bank of China. In Hong Kong, it was a joint sponsor of the US$13 billion secondary listing of e-commerce giant Alibaba Group, which owns the South China Morning Post.
The Hong Kong-listed company is in the process of applying for a listing in Shanghai. The company will use all the funds raised to replenish its operating capital and seek out potential merger and acquisition opportunities, Huang said.
CICC reported a 21 per cent jump in net profit to 4.2 billion yuan last year from the year before. Revenue increased 23 per cent to 22.8 billion yuan.
Shares of CICC fell 1.1 per cent to close at HK$12.54 on Tuesday, against a rising broader market.
