Merrill Lynch is investing $32 million to purchase a one third stake in a new investment banking venture in mainland China. Merrill says the joint venture with a mid-sized brokerage, Huaan Securities, will have initial registered capital of Yuan 800 million (US$97 million), of which it will put up 33 percent.
Merrill said the venture will seek permission to underwrite domestic securities, trade bonds and advise companies on mergers and acquisitions. “Our cooperation with Merrill Lynch will allow us to leverage on the global expertise of one of the most reputable investment banks in the world,” said Wang Yongping, Huaan Securities chairman.
Credit Suisse First Boston, UBS and Citigroup are also eyeing potential joint ventures in China to sell stock and bond underwriting services in China.
Last month, Beijing gave Goldman Sachs approval to go ahead with a joint venture with veteran investment banker Fang Fenglei. Rival Morgan Stanley has had a Chinese joint venture, China International Capital Corp., for a decade. French banks BNP Paribas and Credit Agricole also have mainland partnerships.
Huaan has 26 branches in Beijing, Shanghai and other cities, and registered capital of US$206 million.
Merrill has a Chinese asset management joint venture with state-backed Bank of China, with its first mutual fund raising a less-than-expected $130 million last year.