Chinese brokerage house returns to Pakistan, invests $1 million

Atif Mohammed Khan, CEO of Alfalah Securities, at the ceremony for the signing of the agreement between CLSA and his company. (AN photo)

• Cash injection by Credit Lyonnais Securities Asia increases Alfalah Securities’ paid-up capital to PKR 400 million
• With net assets worth $99.3 billion, CLSA will offer services to investors involved in China’s Belt and Road Initiative

KARACHI: China’s largest brokerage house, Credit Lyonnais Securities Asia, has invested $1 million to acquire a 24.9 percent stake in Alfalah Securities, reestablishing its presence in Pakistan after a gap of almost two decades.
CLSA has global network of 20 offices in Asia, Australia, Europe and the United States. Its net assets are worth $99.3 billion, and the net revenue of the company stood at $6.9 billion last year. In 2013, CLSA was acquired by CITIC Group to secure a platform for international expansion. However, the former’s management had decided to exit Pakistan after the September 11 terrorist attacks in the United States in 2001, though the business had been trading on the Karachi Stock Exchange since the early 1990s.
“With the injection of Chinese liquidity, the paid-up capital of Alfalah Securities would jump to PKR 400 million from PKR 250 million,” said Atif Mohammed Khan, CEO of Alfalah Securities.
“The matter is with the Securities and Exchange Commission of Pakistan for final approval, which is expected by the end of September, following which Alfalah Securities will be renamed Alfalah CLSA Securities and chaired by Aliuddin Ansari,” added Khan who, along with Ansari, owns 12.6 percent of the company’s shares.
Alfalah Securities is a subsidiary of Bank Alfalah, which is owned by the United Arab Emirates-based Abu Dhabi Group and backed by the International Finance Corporation.
“Alfalah CLSA will offer equity broking, research and investment-banking services in Pakistan, and CLSA will distribute Alfalah CLSA’s research to its global clients,” said Khan. “The CLSA Pakistan venture is aimed at providing services to Chinese strategic investors to acquire new businesses and conduct joint ventures in the country as part of the China-Pakistan Economic Corridor and Beijing’s Belt and Road Initiative.”
CLSA CEO Jonathan Slone said: “Pakistan is a key market for CLSA and one where we have had a long-standing interest. Our strategy is to establish an on-the-ground presence in all major Asian markets, with a particular focus on markets in the Belt and Road Initiative.
“I am confident that this investment will provide our clients with enhanced access to a dynamic frontier market with exciting investment opportunities, while expanding CLSA’s Asia research coverage and distribution footprint.”
The total Chinese investment under the CPEC umbrella is estimated at $62 billion, mainly in energy and infrastructure projects that will be implemented across Pakistan. Experts believe CPEC will not only benefit China and Pakistan but potentially also Iran, Afghanistan, India, the Central Asian Republics, and the rest of the region.
Islamabad in 2017 sold a 40 percent stake in the Pakistan Stock Exchange to a Chinese consortium that includes three exchanges: the China Financial Futures Exchange Company Limited, Shanghai Stock Exchange and Shenzhen Stock Exchange. They acquired a 30 percent stake, while two local financial institutions, the Pak-China Investment Company Limited and Habib Bank Limited, each acquired a 5 percent stake.
CLSA’s return to Pakistan is expected to expand the investment portfolio of foreign investors at the Pakistan Stock Exchange, as the company has 30 years of experience operating in Asian markets.