China's CITIC acquires stake in NY brokerage firm BTIG

Updated: 2014-04-16 11:32

By Jack Freifelder in New York (China Daily USA)

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Citic Securities Co (CS), China's largest brokerage by market value, is looking abroad for new business opportunities, and the first stop is New York City.

CS has acquired a stake in New York-based BTIG LLC, a global financial services company that provides research and advisory services for institutional investors on stocks, financial derivatives and commodities. The terms of the deal and stake size were not disclosed.

Steve Starker, BTIG's co-founder, said the firm would continue to operate independently from CITIC and its subsidiaries. With nine US branches and four international offices, BTIG employs more than 450 people worldwide.

The Chinese investment bank is making the investment through its Hong Kong-based subsidiary, Credit Lyonnais Securities Asia (CLSA), BTIG said in a statement. CS bought CLSA last year from French bank Credit Agricole SA for $1.25 billion.

"We are fortunate to have the support of an innovative industry leader like CLSA," said Scott Kovalik, co-founder and CEO of BTIG, in a company statement. "The investment by CLSA will help us pursue continued growth in our core businesses and help us expand into new areas."

CS, a wholly owned subsidiary of the Beijing-based CITIC Group, is a full-service investment bank in Shenzhen that offers its clients a variety of services, including brokerage asset management and investment advisory analysis.

BTIG announced the deal with CS on Monday. Starker told Bloomberg News that the company plans to use the funds from the stake purchase to augment its day-to-day research operations.

The Wall Street Journal reported on April 13 that CS's purchase of the CLSA unit last year was "the first major acquisition by a Chinese broker of a foreign competitor". CLSA employs more than 1,500 employees in 21 cities. Most of CLSA's traders are based in Asia, but the brokerage has had a representative office in New York for the past 25 years.

Jonathan Slone, CLSA's Hong Kong-based CEO, said in an interview this week with Bloomberg that the BTIG stake purchase "is consistent with our growth strategy for the US market".

Fanny Chen, a Hong Kong-based analyst with Haitong International Securities Group, told Bloomberg that as China opens up its capital markets this deal further "demonstrates Citic's determination to expand overseas".

"A large overseas operation is a great advantage" and "it will further cement Citic Securities' leading position in China's brokerage industry," Chen said in an April 13 report by Bloomberg.

The CITIC Group was established in 1979 and the securities branch of the company was set up 16 years later in 1995. CITIC Group, with close to a 25-percent stake, is still CS's largest shareholder.

Chinese investment in the US doubled to $14 billion in 2013, according to data from the Rhodium Group, and Chinese investors have announced deals worth more than $6 billion in the first quarter of the year alone.

Barry P. Bosworth, an economist with the Brookings Institution in Washington, said he is not surprised by the trend of Chinese investment into the US.

"There has been a long tradition of foreign firms using FDI in the US to learn about new markets and technologies," Bosworth said earlier this month in an email to China Daily. "China is simply following that trend."

 China's CITIC acquires stake in NY brokerage firm BTIG

Pedestrians mingle outside BTIG LLC's office at 825 3rd Ave on Tuesday. With nine US branches and four international offices, BTIG employs more than 450 people worldwide. Jack Freifelder / China Daily

(China Daily USA 04/16/2014 page2)