People
&Markets
CLSA plots Belt and Road expansion
Citic Securities unit builds footprint from Vietnam to Dubai
CLSA, the offshore arm of China’s Citic
3ECURITIES ûISûLOOKINGûTOûOPENûMOREûOFlCESûINû
major outposts along the Belt and Road, its
chief executive Jonathan Slone said last week.
Last month, CLSA announced its return
to Pakistan after a nearly 20-year absence
following its acquisition of a 24.9% stake in
!LFALAHû3ECURITIES ûTHEûSECURITIESûAFlLIATEûOFû
Bank Alfalah.
The Hong Kong-headquartered brokerage
lRMûISûPLANNINGûTOûOPENûOFlCESûINû$UBAI û
Bangladesh and Vietnam, Slone said, and will
expand into other markets in the near future.
“Given that China is getting more active in
Pakistan and all of these One Belt, One Road
marketplaces, we see Chinese companies
setting up there, we see the need for capital
so we see the need to be open there,” he said.
“If you follow that logic, we will be looking
at the next round soon. CLSA is a small
company so we don’t have the bandwidth to
do a lot of things at the same time. Once we
bed down those countries, we’ll look at other
markets.”CHINESE DOMINANCE
Launched in 2013, China’s Belt and Road
initiative aims to reinvigorate the ancient
Silk Road trading route and to develop a
maritime equivalent.
Funding for the scheme so far has
primarily come from a combination of the
country’s state-owned banks, complemented
by new China-led development institutions
such as the US$100bn Asian Infrastructure
Investment Bank.
In contrast, international banks have beenrelegated to providing ancillary services such
as cash management, foreign exchange and
underwriting related debt issues.
One advantage CLSA has over its
competitors is its relationship with parent
Citic Securities, according to Slone.
h7EûAREûPARTûOFûONEûOFûTHEûLARGESTûlNANCIALû
groups in China,” he said.
“We’re part of the largest securities house.
We’re no longer an agency broker. We have
AûBIGûBUSINESSûINû#&#-û;CORPORATEûlNANCEû
ANDûCAPITALûMARKETS= û&)##û;lXEDûINCOME û
currencies and commodities] and private
equity. We focus on both the debt and equity
side.”
According to Slone, CLSA is indifferent as to
whether its expansion will involve acquiring
OTHERûBUSINESSESûORûSETTINGûUPûNEWûOFlCES
Its return to Pakistan, which also involved
former CLSA employee Aliuddin Ansari and
current Alfalah Securities CEO Atif Khan
acquiring a combined 12.6% in Alfalah
Securities, would not necessarily set a
template, he said.
“It depends on who the available partners
are,” he said. “We don’t have an overall
Hegelian view on the way we do things.
7EREûAûLOTûMOREûmUIDûTHANûTHATûANDûWEREû
ready to be pragmatic.”COPS AND ROBBERS
CLSA has been expanding in Asia in the
last several years and has won several
investment banking mandates, in part due
to the connections of its parent in China.
It was joint sponsor alongside Goldman
Sachs and Morgan Stanley earlier this yearon the HK$42.6bn (US$5.4bn) IPO of Chinese
SMARTPHONEûMAKERû8IAOMI ûTHEûlRSTûCOMPANYû
with weighted voting rights to list in Hong
Kong.
It was also joint global coordinator along
with Credit Suisse on the HK$7.08bn dual
primary listing of biotech company BeiGene,
THEûlRSTûOFûITSûKINDûUNDERûNEWûRULESûTOûATTRACTû
more companies from the sector. Goldman
Sachs and Morgan Stanley were joint
sponsors.
Slone said CLSA would continue to expand
across different product lines and singled out
equity-linked, in particular, as a growth area.
“Our equity-linked business has been
great for us,” he said. “Somebody asked John
$ILLINGERûWHYûHEûROBBEDûBANKSûANDûHEûSAIDû
because that’s where the money is and while
we’re not robbing banks, we’re certainly
trying to go where the market wallet is.”
Slone said CLSA also planned to expand
in the United States, but was waiting for the
outcome of Citic Group’s application to set up
AûlNANCIALûHOLDINGûCOMPANY
Citic Group, which is CLSA’s ultimate
parent company, was designated by US
regulators as a bank holding company and
ISûAPPLYINGûFORûlNANCIALûHOLDINGûCOMPANYû
status to remove restrictions under the
Volcker rules.
“In the United States, Citic Group has a
lNANCIALûHOLDINGûCOMPANYûAPPLICATIONûWITHû
the Fed in San Francisco,” he said.
“Once that takes place, we will be able to
talk more about our plans in the US. Right
now we don’t have the status to do a lot.”
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