Macquarie Makes China Play

Post by Sharat on August 28, 2009 · Under Business News, Capital Markets, Company News, International Business News, Mergers & Acquistions, banking · Comment

Australian investment banking major Macquarie Group, is raising billions of dollars for a new trust fund aimed at turning the investment house into a leading offshore player in China’s burgeoning securities markets.

The investment bank is also finalizing a joint venture with a local broker which would give it Chinese domestic share trading capability on the Shanghai and Shenzen exchanges.

Macquarie’s Chinese joint venture will enable the firm to compete against other global investment banks who have already established local joint ventures with Chinese brokers, including Goldman Sachs, Credit Suisse, Deutsche Bank and UBS.

The joint venture is thought to be with local broker Hengtai Securities, with Macquarie owning the maximum allowable stake under Chinese foreign investment regulations of 33 per cent.

Last week Macquarie announced the formation of a US$1.5 billion infrastructure fund which is to be a 50:50 joint venture with Hong Kong listed red chip China Everbright. Macquarie has committed $US100m to the fund.

Macquarie is looking to capture investment returns from the infrastructure investment boom which has been driven by the Chinese government’s US$500 billion plus fiscal stimulus package.

On Thursday, Macquarie also announced that it would take the maximum allowed stake of 19.9 per cent in Sino-Australian International Trust Company (SATC), which will have headquarters in Shanghai.

The deal would enable the group to offer Yuan denominated financial products, and offer equity capital raising capability in China.

Macquarie’s partners in the venture are Beijing Sanjili Energy Company Limited (Sanjili) and Beijing Rongda Investment Limited (Rongda), which are both controlled by several state-owned companies, including State Development and Investment Company (SDIC), one of China’s largest investment holding companies.

“The joint venture will allow us to extend our client service capability as we build a domestic distribution network and to arrange financing for international clients operating in China and locally based corporates,” the head of Macquarie Capital Asia, Andrew Low said.

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