UBS sale of China JV to Beijing fund a setback for Citadel Securities
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UBS sale of China JV to Beijing fund a setback for Citadel Securities

The bank’s decision to sell a large minority stake in Credit Suisse’s former China JV to BSAM, a Beijing-based fund it has known for decades, is a setback for Ken Griffin’s Citadel Securities. The US firm is still committed to expanding in China’s troubled market.

Photo: Reuters

At first glance, UBS’s decision to sell a 36.01% stake in Credit Suisse Securities (China) for $91.4 million to Beijing State-owned Assets Management (BSAM) rather than to Ken Griffin’s Citadel Securities, is a blow to the latter’s ambitions in Asia’s largest economy.

UBS had no choice but to sell. Its acquisition of Swiss rival Credit Suisse last year left it with majority shareholdings in two mainland brokerages – an untenable situation under Chinese law. It holds a 67% stake in UBS Securities and held a 51% stake in CSS (China).

Something had to give. Hence the auction process for Credit Suisse’s former China joint venture, which dragged on for more than a year and culminated in a sale that valued the loss-making CSS (China) at $253.4 million.

BSAM simultaneously acquired a 49% stake in CSS (China) from Shanghai-listed Founder Securities, Credit Suisse’s former China partner, for $124 million, taking its stake to 85.01%. UBS will retain a 14.99% stake in the business.

Ken Griffin, Citadel Securities

In all, UBS received more than half a dozen expressions of interest.

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