Citic Securities vice chairman Yin Ke is a patient man. After nearly four years of courtship, Beijing-based Citics recently acquired Hong Kongbased securities brokerage Crédit Lyonnais Securities Asia from Frances Crédit Agricole Corporate and Investment Bank. The biggest-ever offshore takeover by a Chinese brokerage, the $1.15 billion deal gives Citics a branch of $343 billion state-owned investment firm Citic Group global reach.
For Yin and his team, the deal caps thousands of hours of negotiations and many expensive dinners washed down with Chinese liquor and fine French wine in Beijing, Hong Kong and Paris. Why did it take four years? says Yin. At first Crédit Agricole wanted Citics to buy only half of CLSA, he explains. Then came the euro crisis, and everything changed.
Citics plans to use CLSA, which has 1,400 staff in 14 cities, including Mumbai, New York, Singapore and Tokyo, to source deals for Chinese customers. Chinese clients are going global, and theyre more likely to choose Citics now that we own CLSA, Yin says. CLSA has access to research on hundreds of companies and more than a dozen industries from Japan to India and all of Southeast Asia, notes Paul Schulte, CEO of Hong Kongbased financial research firm Schulte Research International.
Citics and the investment banking division of Crédit Agricole began talks back in 2009 after CLSA chairman and CEO Jonathan Slone introduced them. In July 2012, Crédit Agricole announced that Citics had purchased a 20 percent stake in CLSA for $310 million, with the option to buy more. But the French bank waited nearly a year to sell the rest, for $842 million.
CLSA is Citics second stab at a big international deal: In 2008 it pulled out of an agreement to invest $1 billion in Bear Stearns just before the U.S. investment bank was saved from collapse through an arranged takeover by JPMorgan Chase. But the effort wasnt wasted, Yin says. We learned through the experience.
For CLSA the slow pace of the Citics takeover was an advantage, asserts CEO Slone: It gave us a lot of ?time to discuss where we want to take the business.
Read more about banking and capital markets.