Shanghai, Nov. 26 (AFP): BNP Paribas announced on Wednesday a securities venture in China, the latest in a fast-growing list of companies eager to plant their feet on Chinese soil ahead of full liberalisation of the country’s financial markets in 2007.
BNP Paribas launched the deal with Changjiang BNP Paribas Peregrine Securities Co. Ltd., with 600 million yuan ($72 million) in paid-up capital.
Approval from the China Securities Regulatory Commission (CSRC) makes it the first foreign bank to act as lead underwriter for equity and debt issues in China, the French banking giant said at a news conference here.
BNP Paribas Peregrine chief executive Jean-Claude Bergadaa said that Changjiang’s deal, flow would be transferred immediately to the joint venture and that the first transaction should be completed within three to four months.
Changjiang is currently one of the 15 largest underwriters in China and the aim is “to be in the top 10 in underwriting in China in terms of equities over the next three years,” Bergadaa said. “It’s time for foreigners to get into the market,” he said.
“Eighty percent of the underwriting in China is done by 10 firms and there are about 2,000 companies waiting to be listed.” Although Bergadaa refused to estimate the average deal size targeted, he said the average underwriting contract would be at least 100 million yuan.
The tie-up with Changjian marks the latest foray by Western banking giants into China’s financial services market. Germany’s Allianz Dresdner Asset Management, France’s Societe Generale Asset Management SA, Belgium’s Fortis Investment Management Group, and Dutch-based ING have all established joint ventures since China’s admittance to the World Trade Organisation (WTO) in December 2001. They are taking advantage of WTO-included provisions for opening up the financial sector to Sino-foreign securities and fund management ventures, ahead of full liberalisation by early 2007.
In August, BNP Paribas Asset Management Co. also obtained approval from the CSRC to set up a fund management joint venture with China’s Shenyin and Wanguo Securities Co. Ltd., one of the country’s largest brokerages.
Under the CSRC’s current ‘channel system’, which apportions initial public offerings to the country’s securities companies, the new joint venture has a quota of six underwriting deals a year.