Citadel Securities bids for Credit Suisse’s China business

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Citadel Securities has bid about Rmb2bn ($280mn) for Credit Suisse’s Chinese securities business, as the market maker founded by billionaire Ken Griffin pushes ahead with expansion plans in China, people familiar with the matter said.

If successful, the non-binding offer made last month in a range of Rmb1.5bn to Rmb2bn would expand the market maker’s China presence substantially. A Chinese company has made a rival bid, a person with knowledge of the matter said.

UBS put the unit, which includes investment banking and brokerage services, up for sale after taking control of Credit Suisse when it collapsed last year. UBS already has a securities unit in mainland China and cannot hold two licences.

Citadel Securities is licensed as a foreign institutional investor in Chinese markets but does not have a licence to operate a domestic securities business offering brokerage and underwriting services in Shanghai and Shenzhen. Such licences can take years to obtain.

“It’s a highly risky bet that a foreign firm can break into the competitive and highly political Chinese market,” said Andrew Collier, managing director of Orient Capital Research in Hong Kong. “On the other hand, it gets them a seat at the table for not much money.”

News of the bid was first reported by Bloomberg. UBS and Citadel declined to comment.

The push by Citadel Securities to expand its China footprint comes as global investors increasingly shun the country’s underperforming stock market. The benchmark CSI 300 index finished 2023 down more than 11 per cent, with 90 per cent of foreign inflows to Chinese equities piling back out by the end of the year.

But Griffin has remained relatively optimistic about investing in the country. “In China, the story is the unbelievable size the market has become, combined with innovation,” he said in an interview with the Financial Times in June.

Citadel Securities and Citadel, the hedge fund owned by Griffin, have also been expanding elsewhere in Asia, opening offices in Tokyo last year.

The China deal’s price could shift as bids depend on the valuation of the company’s assets, which can change, according to a person with knowledge of the matter.

Credit Suisse took a majority stake in the securities venture in 2020 after China’s regulators introduced reforms enabling international banks to have full control of their mainland units.

Citigroup last month won approval from Chinese regulators to launch its own wholly owned mainland investment banking unit.