Appliance-Maker Haier’s Financial Arm Takes Stake in Top Investment Bank

* Haier Financial’s bid to develop its industrial finance strategy by buying into CICC follows a similar move by Alibaba in February

* The $805 million deal follows a nine month wait for regulatory approval after the two companies signed a transfer agreement in June

The financial arm of appliance-maker Haier Group has become the second largest shareholder of China’s oldest joint-venture investment bank, deepening their decade-long financial collaboration and helping push forward the company’s industrial strategy.

Haier Financial Holdings now holds a 9.5% stake in China International Capital Corp. Ltd. (CICC), after acquiring domestic shares from the largest shareholder Central Huijin Investment Ltd., according to a notice released on Tuesday. State-owned Central Huijin still holds 46.2% of shares in CICC, remaining its largest shareholder.

The two companies signed the transfer agreement in June, but the securities watchdog only approved the 5.4 billion yuan ($805 million) deal recently. Investors who intend to hold more than 5% of the shares in a securities firm must get approval from the regulator.

The deal marks another step in Haier Financial’s bid to develop its industrial finance strategy. Haier Financial has set up and invested in dozens of companies, providing services including financial leasing, microloans, financial advising and investment services. Haier Financial also operates a peer-to-peer lending platform and runs consumer finance businesses.

“Haier Group and CICC have cooperated for over 10 years in fields that include financial advising, cross-border mergers and acquisitions, and the introduction of strategic investors,” CICC said in an internal letter Caixin has acquired. In October, CICC helped Haier Group go public in Germany.

This deal will allow Haier to take advantage of CICC’s multiple financial licenses to help fulfill its broader industrial finance strategy, said Cliff Sheng, partner at consultancy Oliver Wyman. CICC has expertise in overseas listings and the underwriting business.

Haier is not the only company eager to develop its financial business that has taken a stake in CICC. In February, Alibaba Group Holding Ltd. expanded its ownership of the investment bank by increasing its stake to 11.7% from about 5% of CICC’s Hong Kong-listed shares. Overall, Alibaba now holds about 4.84% of CICC’s total shares, making it the fourth-largest shareholder after Central Huijin, Haier Financial and Tencent.

In September 2017, tech giant Tencent Holdings purchased 207.5 million newly issued CICC shares in Hong Kong, equivalent to 4.95% of CICC’s total equity. Now Tencent is CICC’s third-largest shareholder.

Zhao Runhua also contributed to this report.

Contact reporter Timmy Shen (hongmingshen@caixin.com)