Bear Stearns, Citic form alliance to develop business in China

By Lisa Kerner

Charlotte, N.C., Oct. 22 - The boards of directors of both the Bear Stearns Cos. Inc. and Citic Securities Co., Ltd. approved the companies' plans to form a strategic alliance.

The alliance will include:

• Sharing management expertise and technology to develop new capital markets products and businesses in China;

• Establishing an exclusive joint venture combining the existing businesses of both companies in the rest of Asia; and

• Cross-investments of some $1 billion in each firm by the other.

Bear Stearns will combine its businesses in Asia, including its operations in Hong Kong, Tokyo and Singapore, with Citic's Hong Kong operations and Citic Securities International Co. Ltd. to form a new Hong Kong-based joint venture. Citic will also pay a financial consideration to Bear Stearns.

The joint venture is aimed at international companies seeking access to Asian capital markets and for Chinese entrepreneurs, corporations and state-owned enterprises needing to access capital or invest outside of the region, a news release stated.

Citic Securities will acquire approximately $1 billion of 40-year convertible trust preferred securities that will convert, on a fully diluted basis, to about 6% of Bear Stearns' shares. The company could also increase its total diluted shareholding in Bear Stearns up to 9.9%.

Bear Stearns will seek regulatory approval with China to acquire a similar stake in Citic Securities for about $1 billion through a six-year convertible debt security and five-year options to acquire additional shares.

"This alliance will enable us to build out our existing business and provide new financial products and services to our domestic clients," Citic chairman Wang Dongming said in the release. "At the same time this partnership will improve our clients' access to global investment opportunities."

Bear Stearns chairman and chief executive officer James E. Cayne added that the alliance "will give Bear Stearns a unique footprint in one of the world's fastest-growing economies through a strategic partnership with a premier market leader."

Bear Stearns is a financial services firm based in New York, and Citic is a securities services firm based in Beijing.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.