HSBC China brokerage joint venture partner selling 39% stake

Industry:    5 months ago

HSBC Holdings PLC’s China securities brokerage joint venture partner is selling most of its equity ownership, an exchange filing showed, and a source with knowledge of the matter said the bank was expected to bid for the stake.

State-owned Qianhai Financial Holding, which owns 49% of HSBC Qianhai Securities, is auctioning 39% ownership of the unit with an asking price of 1.26 billion yuan ($198 million), a filing from Shenzhen United Property and Equity Exchange showed.

Asia-focused HSBC, which won Chinese regulatory approval for the joint venture in 2017, will bid for the entire 39% stake, said the source, in a bid to expand in the world’s second-largest economy.

HSBC, which owns 51% stake in the joint venture, declined to comment.

The auction expires on Jan. 21, according to the exchange filing. The joint venture posted 135 million yuan ($21.20 million) loss in 2021, it showed.

The joint venture is the first foreign majority-owned brokerage in China, gained by HSBC due to rules favouring Hong Kong businesses.

The auction comes only nearly a week after the bank received regulatory approval in China to take full ownership of its life insurance joint venture.

Global banks and asset managers have been boosting their stakes in their Chinese joint ventures since the country first permitted foreign-majority ownership in some financial businesses in 2019.

Morgan Stanley (MS.N) is also set to increase its stake in its brokerage joint venture in China by 4.06% to 94%, an exchange filing showed in December, putting it on track to take full ownership of the business.

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