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 Bear Stearns, Citic Near a Deal (a win-win situation) |
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ceo/cfo
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作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
Each Firm Would Invest
$1 Billion in the Other;
Entry to China Market?
By KATE KELLY, DENNIS K. BERMAN and JAMES T. AREDDY
October 22, 2007; Page A3
Bear Stearns Cos. is close to a deal with the Chinese investment bank Citic Securities Co. that would give each company a stake in the other and pave the way for business partnerships in both the U.S. and in Asia, say people familiar with the matter.
The investment highlights China's increasing financial prowess on the global stage, and the eagerness with which Western firms are hoping to penetrate the insular Chinese financial sector, which is undergoing unprecedented growth. But it wasn't immediately clear how much entry Bear Stearns would gain there.
Final details were being hammered out late yesterday, these people say, and the deal could still fall apart. But the pact under discussion involves both Bear Stearns and Citic investing about $1 billion in one another, the people said. The finalized deal could be announced as early as today, said these people. Shares in Citic Securities were suspended Monday pending a news announcement.
ROAD TO CHINA?
• Cross Borders: Bear Stearns and Citic Securities are in talks to take stakes in each other worth about $1 billion, paving the way for partnerships in the U.S. and Asia.
• Surging Market: Bear Stearns is among banks looking for access to China's securities market, which is booming, but constricted.
• Deal Substitute: Chinese companies are seeking to do business overseas but have had difficulty buying companies.Citic, these people added, will invest about $1 billion in Bear Stearns and receive securities that will convert over time into a roughly 6% equity stake in the New York-based securities firm. The Beijing-based firm will also have the right to buy a stake of up to 3.9% of Bear Stearns in the public market, for total eventual holdings of no more than 9.9% of its stock.
On the other side, Bear Stearns's $1 billion worth of Citic's debt over time will amount to a 2% stake in the Chinese firm. Bear Stearns will also be given options to buy an additional 5% of the company, exercisable over the course of five years.
Citic's convertible securities have a maturity of 40 years, but Bear Stearns's purchase of Citic's debt will likely convert into stock over the course of five to seven years.
The industry is looking for Beijing to honor pledges to permit more foreign involvement in its rocketing stock market, now worth $3.7 trillion and driven by as many as 50 million individual investors. So far, Beijing has been slow in honoring a pledge as part of its membership in the World Trade Organization to permit foreigners to own up to 33% of a joint venture that can trade stocks and underwrite securities offerings.
On its own, Citic Securities is already one of the industry's biggest players. So far this year, it has underwritten 16 offerings valued at $10.8 billion, ranking second only to China International Capital Corp. in China and fifth overall in Asia, according to Thomson Financial. Citic Securities is also a growing presence through its operations in Hong Kong, which gives it access to deals outside mainland markets.
Foreign involvement in China's securities industry is highly constricted, despite efforts for much of the past decade by the biggest firms to gain a foothold. Morgan Stanley owns 33% of China International Capital, but in recent years has ceased to be involved in operating it. UBS AG has recently been permitted to launch a venture with Beijing Securities. A more recently formed venture, by Goldman Sachs Group Inc., hit turbulence when the U.S. firm's original partner signaled he was considering leaving the venture.
Today's expected deal comes at a signal moment both for Bear Stearns, the fiercely independent, 84-year-old securities firm, and for Citic, which can trace its roots back to former Chinese leader Deng Xiaoping, who founded its parent in 1979. For Bear Stearns, it is a welcome bright spot amid a difficult year, during which two internal hedge funds collapsed, costing investors $1.6 billion and the firm hundreds of millions of dollars.
For Citic, the pact is emblematic of a new direction for Chinese companies that are seeking to do business overseas but have had difficulty buying entire offshore companies. Rather than battle political head winds, these corporations are moving toward strategic partnerships that give them a larger presence in the global market.
In recent weeks, markets in both China and the U.S. have been flooded with rumors of a Bear Stearns deal with Citic Bank Corp., a unit of the Beijing financial conglomerate Citic Group, of which Citic Securities is also a part. Last week, officials at Citic Bank denied any intention to invest in Bear Stearns in the near term, days after a Chinese regulatory official said that Citic Bank had "bid" for a stake in the U.S. firm. In 4 p.m. New York Stock Exchange composite trading Friday, Bear Stearns shares were down 2.5%, to $116.41.
The expected deal highlights the growing clout of China's financial sector, which only a few years ago was isolated and financially weak. China's main state-run banks, having shed huge piles of bad loans, now rank among the highest valued and most cash-rich in the world, while securities companies like Citic Securities are benefiting from a multiyear bull run in China's stock markets. Chinese securities companies and banks have also tapped the booming markets to raise tens of billions of dollars.
The cross-investment shows the different fortunes of the two banks. Bear Stearns's shares are down 28% on the year. A booming stock market has helped the Chinese investment bank's shares to more than triple so far this year, finishing Friday at 105.93 yuan, about $14.12, down 1.09 yuan. Bear shares now trade at a price-to-earnings ratio of about 10, compared to a P/E ratio of about 53 for Citic Securities.
Bear Stearns, which opened a Tokyo office in 1987 and employs about 500 bankers, traders, analysts and other workers in Asia, has been interested in pairing with a Chinese bank for some time. But executives were never interested in selling a major equity stake in their company simply to raise capital, say people familiar with their thinking.
James Cayne, chairman and chief executive of Bear Stearns, first became acquainted with Citic Securities officials in the early 1990s, say people familiar with the matter. But the expected deal came together in the last two months, these people say, during which time Mr. Cayne and Donald Tang, a Bear vice chairman, traveled to Beijing to meet with Citic officials.
作者：ceo/cfo 在 海归商务 发贴, 来自【海归网】 http://www.haiguinet.com
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 Bear Stearns, Citic Near a Deal (a win-win situation) -- ceo/cfo - (6713 Byte) 2007-10-22 周一, 18:39 (3096 reads)
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