Credit Suisse Pushes Deeper Into China With IPO Underwriting

Bloomberg News, Bloomberg News

(Bloomberg) -- Credit Suisse Group AG is pushing deeper into China with plans to extend underwriting of initial public offerings even as markets are roiled by Beijing’s crackdown on the booming financial technology and private education industries.

The Swiss lender plans to sponsor initial public offerings on the Nasdaq-like Star Market Board in Shanghai, Tim Tu, head of the bank’s China securities joint-venture said at a briefing in Beijing on Monday. The unit is also seeking securities investment advisory and proprietary trading licenses, he said.

The plan comes at a time when China’s technology industry has been thrown into turmoil by a broad campaign that began late 2020 against the growing heft of Chinese internet companies from Didi Global Inc. to Alibaba Group Holding Ltd. Investors have been rattled by a series of regulatory crackdowns that expanded from fintech to encompass everything from ride-hailing to grocery buying, food delivery and online education.

Also under the scanner are offshore listings as China moves to secure the treasure trove of data Internet platforms control. The increased reviews will likely drive more Chinese firms to seek listings closer to home, in Hong Kong as well as on the mainland.

With Shanghai’s Star board, Credit Suisse is betting on the growing importance of a market which many global banks have yet to fully embrace. Under a quirky rule for IPOs on China’s technology exchange, lead banks must buy at least 2% of the shares issued, something most foreign players have shied away from given the need for additional capital. So far only UBS Group AG has led deals on the venue.

“We understand and support the regulatory requirements” on co-investing at Star and the company has been preparing “prudently,” said Tu, adding that Credit Suisse has potential deals in the pipeline and aims to secure them as soon as possible.

In a move that may boost future revenues, the Swiss bank’s venture also plans to apply for a nationwide license for its securities brokerage, Janice Hu, the lender’s newly-appointed chief executive officer of China, said at the event.

Business Expansion

The company aims to “gradually expand our business scope into wealth management, widen business channels and create more business opportunities” in China, Hu said.

Credit Suisse renamed its China securities joint venture with Founder Securities Co Ltd. as Credit Suisse Securities (China) Ltd last month, after obtaining 51% ownership.

Along with other major banks Credit Suisse is pushing into China as it opens its capital markets. More than 60 professionals have been recruited to join the joint-venture across all businesses since it became the majority shareholder and Credit Suisse plans to double headcount in the next 18-24 months, Hu said.

The China expansion comes as Credit Suisse is seeking to stem defections elsewhere as it deals with the fallout of the collapses of Greensill Capital and family office Archegos Capital Management. Many of the departures so far have affected the investment bank, where the firm has offered retention bonuses to help offset the hit to stock-based awards.

(Adds context on China’s regulatory crackdowns from third paragraph)