Zurich / Basle, September 28, 2005, 07:00 AM
Beijing SASAC, UBS and IFC to Restructure Beijing Securities
Beijing SASAC1, UBS and the International Finance Corporation (IFC) are in discussions to restructure the operations of Beijing Securities Co. Ltd into an entity to be managed by UBS.
The restructuring proposal, approved by the State Council, would see the new securities company providing – among other services – domestic debt and equity underwriting in China. Additionally, and distinct from other Sino-foreign joint ventures, the new company will be able to conduct secondary trading and distribution in both equity and debt markets and domestic wealth management services in China.
UBS expects to invest up to RMB 1.7 billion (USD210 million, CHF272 million) in return for its equity stake in the restructured operation. The restructuring will occur through the transfer of certain assets to a new company that will possess the licenses necessary to operate across a breadth of areas unparalleled in other Sino-foreign joint ventures. Such a structure shields UBS from any legacy liabilities.
The parties are united in their view that the restructuring proposal represents a unique opportunity to benefit their respective stakeholders, to assist in advancing the process of reform in China’s securities industry, and to establish a powerful precedent for the successful implementation of such restructurings.
“This proposal, in addition to UBS’s existing QFII facility and funds management joint venture (UBS SDIC Funds Management) in China, is a key element of UBS’s strategy for the Chinese domestic securities market. It represents a dynamic and innovative new approach to the restructuring of the securities industry on the part of China’s Government and regulators. We look forward to working with our partners and the regulators to make this vision a reality,” said Peter WUFFLI, UBS Chief Executive Officer.
The proposal outlines an initial shareholding structure that would permit a company controlled by Beijing SASAC to hold 33% of the equity in the restructured operation, UBS a 20% stake, and IFC a stake of less than 5%. A consortium of Chinese domestic strategic investors, agreed by Beijing Securities and UBS, will hold the remaining 42% of equity. IFC participation is subject to approval by its Board of Directors.
Beijing SASAC, UBS, IFC and Beijing Securities will continue to work together with a view to executing final documentation as soon as practicable. The proposal remains subject to regulatory approval. The discussions remain confidential and none of the parties has any further comment at this time.
Zurich / Basle, 28 September 2005
UBS
