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China’s leading investment bank and brokerage, may soon buy Russell Investment Management, a top global asset management firm based in the US, reported Caixin Online.
Citic Securities, which is partly held by the state-owned financial powerhouse Citic Group, and listed on both the Shanghai and Hong Kong exchanges, plans to buy the firm for $1.8 billion from the London Stock Exchange (LSE) through a subsidiary called Citic Securities International Co., unnamed sources with first-hand knowledge of the matter told Caixin.
The LSE acquired the unit last year as part of its $2.7 billion purchase of index-compiler Frank Russell Company. The LSE bought the firm for its index and data divisions in order to take advantage of the trend toward passive investments. Russell is best known for the Russell 2000 Index, the benchmark for small-cap US companies. The investment arm has $270 billion worth of assets under management globally.
However, the LSE has been trying to sell the Seattle-based asset management division since February when some investment banks told the exchange that owning the business would put the LSE in conflict with its clients.
The Citic bid far surpasses the offers from other interested buyers, such as Towers Watson, an American risk management consultancy, and Shanda Group, a Chinese online gaming and investment conglomerate, said the source. Analysts have said they expect the unit to sell for about $1.25 billion, reported the Financial Times.
The source said Citic and the LSE had a negotiating meeting on Aug. 18.
“Acquiring Russell Investments means opening a window to the US market for Citic Securities,” another person familiar with the matter told Caixin. “Russell Investments has strong research capabilities and financing power abroad.”