Citic Securities Co. (600030), China’s largest brokerage by market value, is seeking to raise 5 billion yuan ($800 million) to 10 billion yuan for its first private equity fund, President Boming Cheng said.
Beijing-based Citic intends to start the fund, which China’s securities regulator has already approved, by mid- November, Cheng said at an annual conference of the Chinese Finance Association in New York yesterday. The funds, being raised from Chinese institutions including government agencies, will be used to help buy stakes in companies involved in merger and acquisition transactions, he said.
“Eighty percent of the fund will be used soon after its inception next month as we have many projects in the pipeline,” Cheng said in an interview on the sidelines of the conference. His firm, founded in 1995, is controlled by the state-owned Citic (6030) Group.
Goldstone Investment Co., Citic’s direct investment arm, had been seeking about $800 million for the fund, two people with knowledge of the matter said last month. Private-equity fundraising in the Asia-Pacific region fell to a three-year low of $22.3 billion in the first half of 2012 as managers struggled to lure commitments amid global economic turmoil, the Asian Venture Capital Journal said in August.
Citic’s planned $1.25 billion acquisition of CLSA Asia- Pacific Markets, the Hong Kong-based securities unit of France’s Credit Agricole SA (ACA), will help the Chinese firm improve return on equity by making use of foreign funds raised through its Hong Kong share sale a year ago, Cheng said.
After the merger, CLSA can contribute with its stronger marketing and research capabilities and Citic will help bring investment banking business to CLSA, Cheng said. He added Citic won’t make big changes to CLSA’s management and will allow the team to remain independent.
“We won’t exclude any possibilities both home and abroad of more similar purchases,” Cheng said in the interview. “We’ll choose the right timing in accordance with our managing and financial abilities.”
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