Citic Buys Into CLSA

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Citic Securities, China’s largest investment bank, recently announced that it plans to acquire 19.9 percent of Credit Agricole SA (ACA)’s brokerage units, CLSA and Credit Agricole Cheuvreux, for $374 million:

Citic and the investment-banking unit of Credit Agricole, France’s third-largest lender by market value, plan to create a brokerage partnership and may seek to cooperate in other areas, the companies said in an e-mailed statement today.

The accord with Beijing-based Citic, which is preparing for a $2.2 billion sale of shares in Hong Kong, stops short of their original plan to create an investment-banking joint venture in Asia. Credit Agricole, based in Paris, and Citic began talks in May 2010, and in December agreed to extend the talks by six months to June 30.

“It’s a minimum agreement,” said Pierre Flabbee, a Paris- based analyst at Kepler Capital Markets who has a “buy” rating on Credit Agricole’s shares. “At least this is going to allow developing the businesses, but it isn’t as ambitious as what was envisioned.”

This is notable as it represents an investment in CLSA’s Asia-focused equity research platform. CLSA’s research offerings include equity strategy, economic research, country research, country research, company & industry research, quant & technical analysis, and thematic research. CLSA has 150 analysts located in 20 cities across Asia and Australia, many of whom are ranked by Institutional Investor and AsiaMoney. Although the deal is less ambitious than was originally proposed, we would still see this as a bullish sign for Asia-Pacific equity research.

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