D.E. Shaw & Co., the $21 billion hedge-fund firm, is in advanced talks to buy a stake in Chinese state-controlled investment company Tianjin TEDA International Holding (Group) Co., said three people familiar with the matter.
D.E. Shaw, based in New York, is in negotiations to acquire 15 percent to 20 percent of TEDA International for as much as 6 billion yuan ($942 million), one of the people said, declining to be identified because the talks are confidential. TEDA International oversees the Tianjin city government’s investments in financial companies including China Bohai Bank Co. and Tianjin Trust and Investment Co.
The investment would be the biggest by a foreign acquirer in China’s financial-services industry since March, according to data compiled by Bloomberg. D.E. Shaw, founded by David Shaw, bought about $150 million of stock in New China Life Insurance Co.’s initial public offering in Hong Kong this month.
China “remains a safe haven for investors, at least among emerging market economies,” said Lu Zhiming, a Shanghai-based analyst at Bank of Communications Co. Economic growth of more than 8 percent over the next two years will help bolstering the financial-services industry, he said.
Kelly Franck, who handles media enquiries for D.E. Shaw at public relations firm Burson-Marsteller in Hong Kong, declined to comment on the discussions. An official at TEDA in Tianjin, who declined to be identified citing company policy, had no comment.
The companies may announce an agreement on the investment as early as next month, two people said.
China’s lenders boosted combined profits by 35 percent last year, according to the banking regulator, as the nation’s economy expanded to overtake Japan as the world’s second biggest. Shares in lenders including Industrial & Commercial Bank of China Ltd., Bank of China Ltd. and China Construction Bank Ltd. have tumbled this year on concern that loans to state-owned companies may default.
TEDA International, set up in December 2007, posted net income of 88 million yuan in 2010, according to exchange filings by Shenzhen-listed Tianjin TEDA Co. It is 61 percent owned by TEDA Investment Holding Co., which also controls Tianjin TEDA Co., according to an Aug. 16 filing.
D.E. Shaw in May agreed to start stock-brokerage and private-equity businesses in India with billionaire Mukesh Ambani as demand for financial services grows in the world’s second-fastest growing major economy. The money manager will join with Ambani’s Reliance Industries Ltd., India’s biggest company by market value, to offer investment banking, derivatives trading and alternate-asset management next year.
The firm last year relocated Julius Gaudio, one of its six executive committee members, to Hong Kong from New York as it expands in a region that’s home to the world’s two fastest-growing major economies.
D.E. Shaw has been investing in Asia for more than 22 years. It opened its first office in the region in 1996 in Hyderabad in the southern Indian state of Andhra Pradesh. More than half of all its employees globally are based in the South Asian nation.