Investment bank CICC wants to be ‘bridge’ for Chinese companies in south-east Asia

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China International Capital Corporation says south-east Asia has only seen the “tip of the iceberg” of Chinese companies wanting to explore opportunities in the region, as the state-backed investment bank grows its own overseas presence to offer services to those looking to expand.

CICC, which has about $90bn in assets and shareholders that include Tencent and Alibaba, said it was targeting Indonesia, Vietnam, Malaysia and Thailand for its third phase of overseas growth. South-east Asia, home to 700mn people, is China’s top trading partner.

The bank’s office in Singapore has, like all of its overseas offices operates under CICC International, more than doubled its headcount — to 60— since the pandemic began, according to Stephen Ng, who leads the bank’s south-east Asia and south Asia operations.

CICC was granted approval in Vietnam in September for a representative office for marketing and sales and will apply for a financial advisory licence in Indonesia. Offices in Malaysia and Thailand would follow over the next few years, he said.

“We are only seeing the tip of the iceberg of Chinese outbound investment,” Ng told the Financial Times. “South-east Asia’s proximity, culture, language and natural resources mean it is a big attraction for Chinese corporates.”

He singled out Indonesia for opportunities in mergers and acquisitions, equity fundraising and bond issuance.

“Like many countries, they’re still more used to dollar bonds, eurobonds and Japanese yen. But still, CICC has an important role in telling them more about why panda bonds are relevant for their nation building,” he said, naming projects such as Indonesia’s $35bn construction of a new capital city, Nusantara. 

CICC was established in 1995 as a joint venture between Morgan Stanley and China Construction Bank, with a mandate to serve mainland Chinese and international markets. It was the country’s first investment bank and was for many years considered the institution of choice for China’s state-owned enterprises. Morgan Stanley offloaded its stake in 2010.

The most active Chinese investment bank in offshore dealmaking, CICC reported revenues of Rmb18.6bn ($2.6bn) in the first half of 2023, a 5 per cent increase on a year earlier. It does not disclose whether its overseas offices ventures are profitable, but according to filings, the offshore business had revenues of Rmb3bn in the first half of 2023, a 31 per cent rise on the previous year. This included its Hong Kong office.

Expansion beyond the mainland began in 1998, with an office in Hong Kong, and a second phase followed with openings in other global financial hubs including Singapore, New York and London.

Now the bank is entering its third phase of international expansion, according to Ng, and south-east Asia forms a crucial part of that. It hopes to offer services in areas that encompass Indonesia’s digital economy as well as the electric vehicle ecosystem, which includes nickel.

Ng said analyses showed China’s market comprised 90 per cent retail investors 15 years ago, but it was now 50 per cent institutional. “If Indonesia continues to go well, I think we could see something similar [to China],” he said.

Ng has also overseen more of CICC’s services being offered in Singapore. It launched investment banking in the city-state in 2010 and brought in more product lines, including asset and wealth management, during the pandemic.

Ng said the wealth management business was nascent but so far “very successful”. He had seen no slowdown in wealthy Chinese, including family offices, looking at Singapore, even after the city-state was rocked by a large money laundering investigation last year. “People are still knocking on our doors and wanting to come to Singapore,” he said.

This year, the bank would focus on commercialising and monetising relationships it has built in the region, Ng added. It already serves companies such as electric-vehicle makers BYD and Geely, and CICC wants to be the “bridge” that connects them to south-east Asia.

“For every BYD and Geely, there are hundreds or thousands of other Chinese companies looking at south-east Asia for potential investments,” Ng said.

Additional reporting by Cheng Leng in Hong Kong