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China’s Largest Investment Bank Announces First Overseas Acquisition

By Leng Cheng
China International Capital Corp. has announced a deal in which it is buying a majority stake in U.S.-based asset management firm Krane Funds Advisors LLC. The price of the deal was not provided. Photo: IC
China International Capital Corp. has announced a deal in which it is buying a majority stake in U.S.-based asset management firm Krane Funds Advisors LLC. The price of the deal was not provided. Photo: IC

(Beijing) — China International Capital Corp. (CICC) agreed to buy a majority stake in U.S.-based asset management firm Krane Funds Advisors LLC, as China’s largest homegrown investment bank clinches its first overseas acquisition.

In a joint statement late Monday, the companies didn’t disclose the size of the stake being sold nor the price.

KraneShares, as the U.S. firm is commonly known, is managing $738.6 million of assets. The company has launched five U.S.-listed exchange traded funds (ETFs). Its largest — KraneShares CSI China Internet ETF — has a net asset value of $539.7 million. It is tracking major offshore Chinese technology companies such as Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Baidu Inc.

KraneShares also got approval from Chinese authorities to trade onshore interbank bonds in January.

The acquisition aims to “combine CICC’s extensive global research, investment and wealth management platforms with KraneShares' ETF expertise,” the companies said.

“We are a Chinese investment bank with unique international DNA,” CICC CEO Bi Mingjian said in the statement. Bi added that the deal will expand the product range available to CICC’s clients.

In a separate email on Tuesday, KraneShares said the U.S. firm will be able to access CICC’s on-the-ground research about China and its institutional clients following the deal.

CICC was founded in 1995 as a joint venture between China Construction Bank and Morgan Stanley, which in 2010 exited the country’s first investment-bank partnership involving a foreign firm. CICC was listed on Hong Kong Stock Exchange in November 2015.

CICC has helped some of the country’s biggest state-owned firms, including the People’s Insurance Company of China, float their shares on stock exchanges.

Following the stock-market meltdown of 2015, CICC has been expanding into retail client services while maintaining its core businesses in investment banking, equity sales and wealth management.

In November, CICC announced a purchase of China Investment Securities Corp. from state-owned Central Huijin Investment Ltd. for $2.5 billion as part of its efforts to expand its business to include retail clients.

Shares of CICC in Hong Kong gained 0.35% to HK$11.48 ($1.47) on Tuesday.

Contact reporter Leng Cheng (chengleng@caixin.com)

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