CLSA to follow China’s lead and expand in belt and road areas

The Hong Kong-based brokerage aims to have a presence in all areas encompassed by Beijing’s global trade strategy, says CEO

PUBLISHED : Monday, 10 September, 2018, 7:31am
UPDATED : Monday, 10 September, 2018, 7:31am

CLSA, the offshore arm of China’s biggest brokerage, is planning to accelerate its expansion in Southeast Asia, the Middle East, and other areas that are part of the Beijing’s ambitious “Belt and Road Initiative”.

The Hong Kong-based brokerage, founded in 1986 and acquired by state-owned Citic Securities five years ago, has re-entered Pakistan through a partnership with Alfalah Securities. It also intends to establish a presence in Vietnam, Bangladesh and Dubai this year through similar partnerships with local firms in each market.

Over the past 32 years, CLSA has established a presence in 13 markets in Asia, including India, Indonesia, the Philippines and Korea.

“As China expands, we are also expanding globally,” said Jonathan Slone, CEO of CLSA, in an interview in Hong Kong.

“Asia is our backyard. [But] we want to be in all areas of the ‘Belt and Road Initiative’.”

China launched its flagship global trade strategy five years ago, aiming to create an economic land belt that includes countries on the ancient Silk Road through central and west Asia, the Middle East and Europe, as well as a maritime route that links China’s port facilities with the African coast. 

It is estimated that Beijing has pumped several hundred billions of US dollars into building infrastructure projects across more than 70 countries. 

According to recent statistics from the Ministry of Commerce, Chinese companies, mostly state-owned, have secured US$500 billion of construction contracts along the belt and road’s route in the past five years. Funding for the projects mostly comes from state lenders or financial groups.

Slone said because of the firm’s relationship with Citic Securities, which is controlled by China’s Citic Group, CLSA has advantages in facilitating cross-border funding and carrying out capital market work for Chinese companies to expand overseas.

“Being owned by a strong parent has put us in a unique position, into and out of China,” he said.

Slone hopes to leverage the parent’s deep connections in China and CLSA’s own extensive Asia network and global distribution, to play a more central role in helping Chinese companies go global and bringing international capital to China.  

He said CLSA’s investment banking business has grown sharply, with the help of Citic Securities. The firm has completed 17 initial public offerings so far this year and has an “enviable pipeline”.

Thanks to the connections of its parent in China, CLSA has won work on a number of high-profile Chinese tech and internet IPOs in the Hong Kong market. It recently advised Xiaomi, the first company with a dual-class share structure to list in Hong Kong, and Beigene, the first Nasdaq-listed firm to seek a dual listing under Hong Kong’s new rules to attract biotech firms.

Slone also expects the firm’s private equity business to expand, as he sees increasing demand from technology companies to raise capital from the private market. The firm currently has US$4 billion of assets under management.  

CLSA kicks off its 25th investor forum on Monday in Hong Kong, an annual gathering of international investors, companies, and industry leaders to discuss political and economic conditions as well as future trends.

Slone said for the first time, nearly half of the companies attending the forum this year are Chinese firms, which may be coming to tap public and private capital or new markets.