CITIC Securities to inject $425m into HK unit
Updated: 2007-12-10 14:29
Shareholders of CITIC Securities Co Ltd have approved a proposal to inject $425 million into its Hong Kong unit CITIC Securities International after buying out the latter's minority shareholders.
The company said earlier that it will pay up to $25 million for the 11.61 percent stake in the unit which it does not yet own, and the $425-million capital injection will be used to boost the unit's asset management and investment banking operations.
Chairman Wang Dongming said at the shareholder meeting that the unit will use about $280 million to buy a controlling stake in a Hong Kong-based asset management company, paving the way for operations under the Qualified Domestic Institutional Investor (QDII) scheme.
In October, the company won approval from the China Securities Regulatory Commission (CSRC) to invest overseas under the QDII program.
The company has not yet filed an application with the foreign exchange regulator for an investment quota, he said.
He said that the Hong Kong unit also plans to use about $25 million of the capital to form an asset management joint venture or wholly-owned unit in Singapore and Vietnam.
After the capital injection, the unit's annual return on equity will rise to about 20 percent from the current 15 percent, he said.
In addition, all the businesses operated by the unit will be injected into the joint venture formed with US investment bank Bear Stearns after the joint venture is established, Wang said.
In October, the two companies said they will form a Hong Kong-based 50-50 joint venture to offer capital markets services across Asia.
Earlier, the company won approval from the securities regulator to invest in unlisted companies using its own funds. The company plans to invest 831 million yuan to set up a wholly-owned unit which will invest in companies with domestic listing potential.
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