- The Swiss company would be boosting its current stake of 33.3% to a majority 51% through a capital injection.
- Subsequently, according to the terms of the deal, the stake held by the company’s partner Founder Securities Co would be reduced to 49%.
Credit Suisse Group AG (Credit Suisse), a renowned Swiss multinational financial services & investment banking firm, has reportedly agreed to acquire majority control of Credit Suisse Founder Securities Ltd (CSFS), its Chinese securities venture from its China-based partner, Founder Securities Co Ltd (Founder Securities).
Reports cite, Credit Suisse would be boosting its current stake of 33.3% to a majority 51% through a capital injection. Subsequently, according to the terms of the deal, the stake held by the company’s partner Founder Securities Co would be reduced to 49%.
According to a report by the Financial Times, the proposed capital injection would be of approximately SFr 94 million, which amounts to US$ 94 million. For the proposed deal to complete successfully, it would need the approval of regulators first. The Swiss company’s actions follow that of its local rival UBS, which recently obtained approval from regulators to acquire a majority stake in its own joint venture (JV).
Nomura and JP Morgan also successfully obtained regulatory approvals approximately a month ago to establish their own majority-owned brokerage JVs. At the time, the China Securities Regulatory Commission claimed that the commission would efficiently continue to approve further foreign brokerage JVs.
The global investment bank, which was struggling to consolidate its businesses in China due to previous regulatory rules that limited its ownership to a minority 49% stake, had long been working on lifting the limits imposed on JVs.
Meanwhile, CSFS, established back in 2008 in Beijing, facilitates capital market services to the Chinese domestic market, which also includes sponsoring foreign investment shares, underwriting & sponsoring A-shares as well as corporate & government bonds.
According to reports, In Shenzhen Qianhai, since October of 2016, the JV also managed a securities brokerage. The company is now waiting for its regulatory approval.