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Ant Group Co. outbid Citadel Securities LLC for Credit Suisse\u2019s investment bank venture in China, in a surprise move that will be subject to close regulatory scrutiny, people familiar with the matter said.<\/p>\n
The bid by Jack Ma-backed fintech giant to build a securities business using Credit Suisse\u2019s operations will face a thorough review because China favors a foreign buyer, the people said. The investment banking and brokerage license was originally awarded to the Swiss bank to help open the financial sector to global competition, one of the people said, asking not to be identified discussing private matters.<\/p>\n
That preference poses a dilemma for UBS Group AG, which now owns Credit Suisse. For now, the bank will have to choose between the higher local bid from Ant, or the lower Citadel offer that\u2019s more likely to win government approval, the people said. The negotiations are ongoing and other bidders may still join the fray, one of the people said.<\/p>\n
Representatives for UBS and Ant declined to comment. \u00a0<\/p>\n
UBS is struggling to attract interest in the unit from global firms because of escalating geopolitical tensions, a crackdown on bank data flows and the struggling economy. The bank faces a difficult balancing act because the venture\u2019s Chinese partner, Founder Securities, may reject the lower offer from Citadel, delaying the sale process, the people said.\u00a0<\/p>\n
Citadel Securities, founded by billionaire Ken Griffin, was the only global firm to submit a bid in late December, offering about 1.5 billion yuan ($210 million) to 2 billion yuan, people said at the time.\u00a0<\/strong><\/p>\n Credit Suisse has sought around 2 billion yuan for the entire China unit, including the stake held by Founder Securities. Before it collapsed in March, the Swiss bank had\u00a0offered to buy<\/a>\u00a0out the remaining stake from its partner for 1.14 billion yuan, valuing the firm at about 2.3 billion yuan. The agreement was nixed after the UBS takeover, people familiar said earlier.\u00a0<\/p>\n UBS is required to find a buyer for the Credit Suisse platform because it already controls a securities firm in China and can\u2019t hold two licenses in the same business. The Credit Suisse unit in China mainly consists of investment banking and a brokerage, after the\u00a0wealth operation closed<\/a>\u00a0last year.\u00a0Play Video<\/p>\n Ant\u2019s bid comes after Chinese regulators wrapped up an almost\u00a0three-year probe<\/a>\u00a0into the fintech firm founded by Ma, imposing a 7.12 billion yuan fine in July. The billionaire\u2019s run-in with Beijing has cost his empire\u2014including Ant and Alibaba Group Holding Ltd.\u2014more than $800 billion\u00a0<\/strong>in lost valuation, while derailing what would have been the largest initial public offering ever.\u00a0<\/p>\n Alibaba\u2019s shares fell about 1% in Hong Kong trading on Monday, underperforming the Hang Seng Index which also declined.<\/p>\n Before the crackdown, Ant had ambitions to start a securities business in China though the plan was shelved, one of the people said.<\/p>\n Winning such a permit would help the fintech giant plug a gap, adding one of the last missing pieces to its financial footprint. The company\u2019s operation spans from online payments to wealth management and lending \u2014 the reason why the company is applying to a\u00a0financial holding license<\/a>\u00a0to appease regulators\u2019 demands for greater supervision.<\/p>\n The company has been planning a restructuring that will break off some operations that aren\u2019t core parts of its China financial-related business. It\u2019s looking at leaving its blockchain, database management services and international business out of the main entity that will be used to apply for the financial holding permit, people familiar have\u00a0said<\/a>.\u00a0<\/p>\n<\/div>\n