This rapid build-up is undoubtedly being encourage by Beijing, and I predict we will see an IPO, most likely in Hong Kong and Shanghai, for UnionPay either this year or next, providing an interesting alternative for investors who want to buy into China’s financial services sector with the risk of owning shares of a big state-run bank.īottom line: A bidding war between Chinese buyers could soon erupt for investment bank Piper Jaffray, while UnionPay’s new US tie up is the latest step in an accelerating global expansion. UnionPay has been aggressively expanding abroad through a number of tie-ups with major banks in recent years, but this is one of the biggest e-payments deals to date, and I suspect it will be followed by more in the year ahead. ( company announcement) This deal looks interesting as much for UnionPay as it does for WorldPay, as it opens up huge new possibilities for Chinese merchants to purchase goods from sellers in the US and most of Europe - something that is now difficult for most Chinese firms due to China’s strong currency controls. Meantime, another US company named WorldPay has signed a deal that will allow Chinese buyers to purchase goods in the US and most of Europe over the electronic payments network operated by UnionPay, China’s dominant player in electronic financial transactions. Piper Jaffray’s lack of denial means it has probably been approached by one or more of these players, and I expect this story isn’t finished yet, with potential for a bidding war to break out. Potential Chinese buyers would include Bank of China (HKEx: 3988 Shanghai: 601398) and ICBC (HKEx: 1398 Shanghai: 601398, as well as CICC, the nation’s largest investment bank, all of which have signaled they would like to expand their investment banking activity abroad. ( company statement) As a US-based niche player with a relatively modest market cap of $500 million and a decade of experience helping Chinese tech companies go public in the US, Piper Jaffray does indeed seem like the perfect acquisition target for a Chinese financial company looking to expand its reach abroad. Barker noted the banks are 'inexpensive' when compared to long-term risk premiums and. ( English article) Piper Jaffray responded with a statement saying it intends to remain independent for now, cooling down its shares which ultimately ended up a more modest 2.6 percent in Thursday New York trade. Kevin Barker of Piper Jaffray initiated coverage on 'super-regional banks' with a positive bias. Let’s look at Piper Jaffray first, as that’s the most intriguing of the 2 developments, with shares of the company jumping as much as 10 percent after US media reported it had been approached about a buyout from an unnamed Chinese company. Overall the firm generated net income of $23.9m for the quarter ended March 31, up from net income of $7.3m for the same period in 2005, which included a gain of $6.6m after tax from the company's ownership of two seats on the New York Stock Exchange, which were exchanged for cash and shares in March when the exchange went public.I’ll start off this Friday with a couple of interesting items on Sino-foreign tie-ups involving financial firms, one involving Piper Jaffray (NYSE: PJC), a boutique US investment bank with a history in China, and the other involving another US firm in a new partnership with UnionPay, China’s dominant electronic transaction specialist. Segment pre-tax operating income for the quarter was $23.8m, up 137.6% from the first quarter of 2005. The private services business is one of two revenue-generating segments for the firm that returned revenues of $92.6m for the quarter, up 2.1% compared to the first quarter of 2005 and up 4.8% compared to the fourth quarter of last year.Ĭapital markets recorded $126.1m in net revenues for the quarter, up $35.6m, or 39.4%, from the first quarter of 2005. Last week Piper Jaffray announced it would sell its prrivate client services business and related net assets to UBS for total cash consideration of around $800m (€647m). Duff said: "With the additional capital we will deploy from the sale of the private client services branch network, we will be able to accelerate the momentum in our capital markets business."
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