If expanding in China is not an original
business thought in today’s world, at
least UBS can say that its long-term
strategic perspective and patient investments
have allowed it to become one
of the first foreign financial institutions
to gain a firm footing in the country.
The opening of a Beijing representative
office in 1989, followed by another in
Shanghai four years later, shows how
UBS has always pursued opportunities
in China prudently, but aggressively. In
2003, UBS became the first institution
approved as a Qualified Foreign Institutional
investor (QFII), allowing it to trade in domestic shares and bonds on
behalf of non-China clients. Today,
UBS’s USD 800 million QFII quota
remains the largest of all foreign brokers.
Through QFII, UBS and its clients
hold investments in over 100 Chinese
stocks, more than 30 convertible
bonds and 40 equity funds across different
sectors.
The Investment Bank’s relationship
with China dates as far back as 1985.
A brief look at last year’s key deals
shows that it continues to participate
in notable corporate finance transactions.
In April 2004, the Investment Bank was joint financial advisor to
China Telecom on its USD 3.4 billion
acquisition of ten provincial mainland
telecom businesses as well as to
China Mobile (Hong Kong) on a similar
USD 4.1 billion acquisition of ten
mobile networks in China. In 2004,
UBS topped the China mergers and
acquisitions league table, and to the
end of first quarter 2005, remained
the number one arranger of Chinarelated
M&A transactions, according
to Bloomberg data.
In primary debt, 2004 saw UBS as joint
lead manager of the debut bond offering from the China Development Bank
(comprising USD 600 million and EUR
325 million tranches). Last year,
in October the Investment Bank was
lead manager of the highly acclaimed
EUR 1 billion, 10-year international
sovereign bond issued by the Peoples’
Republic of China.
In fixed income, UBS provides Chinese
investors with access to a full range of
products – ranging from US treasuries
and collateralized debt obligation
securities (CDOs) to liability risk management
products. In August 2004, UBS’s Beijing bank branch commenced operation and in March this year the
branch received a license to conduct
derivatives transactions allowing the
bank to offer its corporate, institutional
and wealth management clients
in China tailor-made solutions to
manage their specific interest rate and
currency risks.
Beyond that, from its Hong Kong
offices, the Investment Bank offers a
comprehensive palette of Chinarelated
financial services that include
sales, research, trading and corporate
advisory services. UBS is also licensed
to underwrite and trade in B Shares (a category of Chinese shares created
10 years ago for foreign investors) on
the Shanghai exchange. In research,
various industry publications, including
Institutional Investor, Asiamoney and
The Asset, rate UBS’s China research
team as the industry leader, with Asiamoney
also giving the firm’s sales and
execution capabilities their leading
rank.
With China having the potential to become a major contributor to
future revenues, UBS will continue
to patiently invest in its franchise –
as it has for the last two decades.
