Credit Suisse Partner Offers to Exit China Venture Before Merger
Founder Securities Co., Credit Suisse Group AG (CSGN)’s Chinese partner, will offer to pull out of a five-year-old investment banking venture with the Swiss bank as it prepares to acquire a competitor.
Founder plans to offer Credit Suisse the option to request that the Chinese brokerage sell part or all of its 66.7 percent stake in Credit Suisse Founder Securities Co., the Changsha-based firm said in a statement to Shanghai’s stock exchange today. Founder said it’s working on a proposal to acquire Minzu Securities Co., which also has an investment-banking business.
The proposals follow the Chinese government’s announcement a week ago of policy changes that portend the end of a 14-month ban on initial public offerings that had damped brokerages’ investment-banking revenue. China last year relaxed rules to let foreign investment banks increase their stakes in domestic joint ventures to 49 percent from 33 percent.
Policy makers will push forward on a so-called registration system on IPOs, according to a Nov. 15 statement posted on the Chinese government’s website detailing decisions from a meeting of the Communist Party’s Central Committee last week. The system may hasten the approval process for the more than 700 companies still awaiting regulatory permission to proceed with share sales.
Credit Suisse owns one-third of its venture with Founder, which competes with similar partnerships between Chinese firms and global banks including UBS AG, Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. Foreign banks are allowed to underwrite stocks and bonds in China only through joint ventures with local firms.
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