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CICC shares soar as Tencent joins in

By Fan Feifei | China Daily | Updated: 2017-09-22 07:33

China International Capital Corp Ltd shares soared in Hong Kong on Thursday after tech giant Tencent Holdings announced  it was taking a 4.95 percent stake in the investment bank.

Tencent will purchase 207.5 million of CICC's newly issued H shares, which account for 12.01 percent of the total issued H shares of CICC, for HK$2.86 billion ($366.4 million), according to a regulatory filing by Hong Kong-listed CICC on Wednesday night.

The transaction will make Tencent the third-largest shareholder in CICC, marking another investment by Chinese tech majors in the traditional finance industry amid the rapid development of the fintech sector.

CICC shares soared as much as 18.19 percent to a record high of HK$18.32 per share at the Hong Kong Stock Exchange. After taking the stake in CICC, Tencent will be authorized to nominate a candidate for company director.

The two companies also signed a strategic cooperation framework agreement on further cooperation in the financial service sector.

In addition, CICC said the two companies will establish a steering committee co-chaired by senior executives from both sides to ensure the cooperation proceeds effectively.

"We are delighted to introduce Tencent as a strategic investor. The partnership is expected to enable CICC to leverage Tencent's financial technology to accelerate the transformation of our wealth management platform and provide more differentiated financial solutions to our clients," said Bi Mingjian, CICC's chief executive officer.

Martin Lau, president of Tencent, said the company is looking forward to cooperating with CICC in developing financial products and services, combining Tencent's advanced financial technology with CICC's wealth management capabilities.

CICC, founded in 1995 by China Construction Bank and Morgan Stanley, was the first investment bank formed through a China-US joint venture. Beijing-headquartered CICC was listed on the main board of the Hong Kong Stock Exchange in 2015.

In July, CICC announced the signing of a definitive agreement to acquire a majority stake in the US-based asset management firm Krane Funds Advisors LLC without a disclosed price.

"It is a trend that more and more tech companies enter the traditional financial sector, such as securities, banking and insurance," said Li Zichuan, an analyst at Beijing-based internet consultancy Analysys.

The tie-up will help CICC expand its wealth management business and accelerate wealth management transformation by using Tencent's advanced financial technology such as big data analysis, he said.

It is not the first time for Tencent to cooperate with players in the financial sector. It has already invested in brokerage firms Futu Securities and Huatai Securities.

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