Jun 15, 2024 05:38 AM
FINANCE
UBS Close to Selling Credit Suisse China Joint Venture to State-Owned Firm
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Credit Suisse Securities was the first securities joint venture approved in China.
UBS Group AG is in talks with a state-owned Chinese company over the sale of Credit Suisse’s China joint venture after an offer from Citadel Securities LLC failed to meet expectations, people familiar with the matter said.
UBS put Credit Suisse Securities (China) Ltd. up for sale after buying the rival Swiss bank last year as it already has its own China securities venture and cannot hold two licenses under Chinese rules. The disposal of the money-losing China brokerage has proved a tough sale, however.
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- UBS is negotiating with BSAM over selling Credit Suisse’s China joint venture after Citadel Securities' offer failed to meet expectations.
- Citadel's non-binding offer was between 1.5 billion and 2 billion yuan but fell short of UBS’s expectations.
- BSAM proposed a cash and stock deal to acquire Credit Suisse Securities, with room for negotiation, after initial approval from its investment committee.
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Who’s Who
- Credit Suisse Securities (China) Ltd.
- Credit Suisse Securities (China) Ltd., established in 2008, was the first securities joint venture approved in China. Credit Suisse owned 51%, with Founder Securities holding 49%. Before its collapse in March 2023, Credit Suisse valued the firm at 2.3 billion yuan. The company posted a 198.9 million-yuan loss last year and had 1.2 billion yuan in assets. The revenue fell nearly by half in that period.
- Citadel Securities LLC
- Citadel Securities LLC made a non-binding offer in December to buy Credit Suisse Securities (China) Ltd. for between 1.5 billion yuan and 2 billion yuan ($207 million to $275 million). Despite being an all-cash offer, it was 15% to 35% below the company's 2022 valuation and failed to meet UBS's expectations. Citadel had no intention of raising the price.
- UBS Group AG
- UBS Group AG is negotiating the sale of Credit Suisse’s China joint venture due to regulatory limitations that prevent UBS from holding two licenses in China. The sale follows UBS's acquisition of Credit Suisse last year. UBS has rejected a lower offer from Citadel Securities and is now considering a cash and stock proposal from Beijing State-owned Assets Management Co. Ltd. (BSAM).
- Founder Securities Co. Ltd.
- Founder Securities Co. Ltd. owns a 49% stake in Credit Suisse Securities (China) Ltd. Before Credit Suisse collapsed in March 2023, it had offered to buy out Founder Securities' remaining stake for 1.14 billion yuan, valuing Credit Suisse Securities at approximately 2.3 billion yuan. BSAM plans to use cash to purchase this remaining stake from Founder Securities as part of the proposed deal.
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What Happened When
- Before March 2023：
- Credit Suisse offered to buy out Founder Securities' remaining stake for 1.14 billion yuan.
- March 2023：
- Credit Suisse collapsed.
- Last year (2023)：
- UBS put Credit Suisse Securities (China) Ltd. up for sale after buying Credit Suisse.
- By December 2023：
- Citadel Securities made a non-binding offer for Credit Suisse Securities for between 1.5 billion yuan and 2 billion yuan.
- End of March 2024：
- BSAM had 14.68 billion yuan of cash at hand, according to its financial report.
- Early May 2024：
- BSAM stepped in with a cash and stock proposal for Credit Suisse Securities.
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