CITIC on Global Buying Hunt 中信集团加入全球收购行列

By newsdoug on March 30, 2012

CITIC Group, one of China’s oldest private investors, is joining a growing number of Chinese investors looking for bargains being sold off as a result of the global financial crisis, with media reporting the company’s brokerage arm is seeking to buy a major brokerage asset from France’s Credit Agricole (Paris: CAGR). (English article) The deal, which would see CITIC Securities (HKEx: 6030; Shanghai: 600030) buy Credit Agricole’s CLSA brokerage brand, would mark the second major attempt to purchase of a global asset by CITIC this year, following news last month that another of the company’s units, CITIC Capital, was making a bid for AsiaInfo-Linkage (Nasdaq: ASIA), one of the oldest US-listed Chinese companies. (previous post) In fact, the Credit Agricole talks aren’t completely new, as CITIC was previously in discussions to buy a smaller stake in the CLSA brokerage unit along with another related asset from the French bank, which was trying to raise cash after taking a hit during the global financial crisis. But what’s new is that CITIC is now looking to buy the CLSA brokerage unit outright, rather than just a 19 percent stake that was being discussed earlier. That seems to indicate that Credit Agricole wants to reach a deal soon and is willing to give a good price, as talks have dragged on for a while now. Likewise, the AsiaInfo deal also looks like a relative bargain as the company’s shares have taken a beating over the past year, down more than 50 percent in 2010, amid a broader sell-off for US-listed Chinese stocks following a series of accounting scandals at several major listed players. Both deals look like they would be in the $1 billion range, which looks like a good comfort level for a group like CITIC, which has plenty of cash, including $1.7 billion raised by CITIC Securities in a Hong Kong IPO last year. CITIC is just the latest in a growing field of cash-rich private Chinese investment groups looking for bargains on the global stage in the wake of the global financial crisis, as most suffered little or no damage themselves during the crisis. Earlier this year, Fosun International (HKEx: 565) said it is eying potential investment oportunties in Europe, where many companies are looking to sell off assets as the continent grapples with its ongoing debt crisis. (previous post) Another aggressive player, HNA Group said last fall it has embarked on a global buying spree that has seen it snap up assets in a range of industries, including shipping and hotels, and boasting it has an additional war chest of more than $6 billion for more purchases. (previous post) Look for even more of these deals in the year ahead, probably mostly focused in the $1 billion range or less, as Chinese investors get more aggressive on the global stage.

Bottom line: CITIC is the latest private Chinese investment firm to step up its activity on the global stage, looking for bargains being sold by cash-hungry western firms.

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