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Citadel Securities has bid about 2 billion yuan ($280 million) for Credit Suisse’s China securities business as the market maker founded by billionaire Ken Griffin pushes ahead with expansion plans in China. said an official.
If a non-binding offer in the range of 1.5 billion to 2 billion yuan made last month is successful, it will significantly expand the market maker’s presence in China. According to sources, Chinese companies submitted competing bids.
After taking control of Credit Suisse after it went bankrupt last year, UBS put its division, which includes investment banking and brokerage services, up for sale. UBS already has a securities arm in mainland China and cannot hold two licenses.
Although Citadel Securities is licensed as a foreign institutional investor in the Chinese market, it is not licensed to operate a domestic securities business providing brokerage and underwriting services in Shanghai and Shenzhen. Obtaining such a license can take years.
“It’s a very risky gamble for foreign companies to be able to enter China’s highly competitive and highly political market,” said Andrew Collier, managing director at Orient Capital Research in Hong Kong. “On the other hand, you can get a seat at the table without spending that much money.”
News of the bid was first reported by Bloomberg. UBS and Citadel declined to comment.
Citadel Securities is expanding its presence in China as global investors increasingly shy away from the country’s struggling stock market. The benchmark CSI 300 index ended 2023 down more than 11%, with 90% of foreign inflows into Chinese stocks set to return by the end of the year.
But Griffin remains relatively optimistic about investing in the country. “The story in China is that the market is incredibly large, coupled with innovation,” he said in an interview with the Financial Times in June.
Citadel Securities and Citadel, the hedge fund owned by Griffin, are also expanding across Asia, opening an office in Tokyo last year.
The price of the deal with China could change because the bid depends on the valuation of the company’s assets, which can change, according to people familiar with the matter.
Credit Suisse acquired a majority stake in the securities venture in 2020 after Chinese regulators introduced reforms that would give international banks full control over their mainland units.
Last month, Citigroup won approval from Chinese authorities to launch a wholly owned mainland investment banking unit.