Ant Group Bids for Credit Suisse’s China Venture

Fintech giant Ant Group has emerged as a formidable contender in the bidding war for Credit Suisse’s investment bank venture in China, reportedly outbidding billionaire Ken Griffin’s Citadel Securities, according to Bloomberg News. However, uncertainties loom over the success of Ant Group’s offer amidst regulatory scrutiny in Beijing favouring foreign buyers.

Ant Group, an affiliate of Alibaba Group, seeks to leverage Credit Suisse’s operations to establish a securities business in China. Yet, the potential acquisition faces a rigorous review process due to Beijing’s preference for foreign involvement in such ventures, sources familiar with the matter revealed.

The situation poses a dilemma for UBS, the current owner of Credit Suisse, as it navigates between Ant Group’s higher bid and Citadel’s lower offer, which is deemed more likely to secure government approval. Ant Group, remaining tight-lipped, declined to comment on the matter while actively pursuing regulatory compliance by restructuring into a financial holding company under Chinese regulatory guidance.

UBS and Citadel refrained from immediate responses to Reuters’ requests for comments, indicating the sensitive nature of the ongoing negotiations.

The bidding war unfolds against the backdrop of challenges facing the A-share market in China, including capital outflows and heightened scrutiny on initial public offerings amid the country’s economic slowdown. UBS’ acquisition of Credit Suisse, orchestrated last year to prevent the latter’s collapse, has led to the dilemma of owning two majority-owned securities firms in China, contravening regulations permitting only one such entity per company.

Seeking to streamline its operations, UBS initiated the sale of Credit Suisse Securities China, drawing interest from global financial players like Citigroup. Citadel Securities expressed its ambition to establish a licensed onshore business in China, underscoring the strategic importance of the venture.

The unit in question, formerly jointly controlled by Credit Suisse and Founder Securities, is currently in the process of UBS’ buyout of Founder Securities, pending regulatory approval. Meanwhile, reports indicate UBS is contemplating headcount reductions in response to the influx of China-focused bankers following its merger with Credit Suisse.

As the bidding process unfolds, the fate of Credit Suisse’s China venture hangs in the balance, with regulatory considerations and competitive pressures shaping the outcome in this pivotal moment for the financial landscape in China and beyond.