Bear Stearns, Chinese bank have a billion-dollar partnership
By Stephen Bernard THE ASSOCIATED PRESS Tuesday, Oct. 23 2007 NEW YORK — Investment bank Bear Stearns Cos. and Chinese bank Citic Securities Co. are forming a strategic partnership that includes $1 billion in cross-investments and the creation of a new Asian joint venture.Citic, which is owned by the investment arm of the Chinese government, will invest in Bear Stearns through 40-year convertible trust preferred securities that will convert to about 6 percent of Bear Stearns' outstanding shares. Citic could potentially increase the stake to 9.9 percent.Bear Stearns will acquire a similar stake in Citic through a six-year convertible debt security. Bear Stearns will also have options to acquire additional shares.Aside from the cross-investment, the pair will form a new joint venture based in Hong Kong that will offer capital markets services across all of Asia. Bear Stearns will contribute its current Asian operations in Hong Kong, Tokyo and Singapore to the new joint venture. Citic will contribute its operations in Hong Kong and pay Bear Stearns a financial consideration for the new 50-50 joint venture.The new venture will offer a range of products, including cross-border mergers and acquisitions advisory, international equity and fixed income offerings and venture capital, private equity and asset management services. Each company is expected to have representation on the other's board of directors.