CITADEL Securities has made a non-binding offer for Credit Suisse’s securities venture in China, becoming the only global financial firm to submit a bid, sources familiar with the matter said.

The firm, founded by billionaire Ken Griffin, late last month put in a bid in the range of 1.5 billion yuan (S$281 million) to two billion yuan, the sources said, asking not to be identified because the matter is confidential. Credit Suisse, now owned by UBS Group, has been seeking around two billion yuan.

Warburg Pincus also looked at snapping up the operations but decided against proceeding since it did not meet the set floor price, one of the sources said. More than half a dozen potential buyers had expressed interest by conducting due diligence, and at least one Chinese firm has also made a bid, one of the sources said.

Citadel Securities is going against the grain as it seeks to build a platform to bring its market-making capabilities to mainland China. Many global firms have tempered their ambitions to expand in the world’s second-biggest economy because of growing geopolitical tension, a crackdown by China on data flows and the struggling economy.

Citadel Securities is planning for years of expansion, chief executive officer Peng Zhao said in November. The firm hired BlackRock’s former China head Tony Tang in September to navigate the increasingly complex regulatory landscape.  

The venture needed to be offloaded after UBS took over its Swiss rival last year. UBS already controls a securities firm in China and cannot hold two licenses in the same businesses.

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Before it collapsed in March last year, Credit Suisse had in 2022 offered to buy out the remaining 49 per cent stake of its partner Founder Securities for 1.14 billion yuan, an agreement which was nixed after UBS’s takeover, the sources said.

Spokespeople at UBS, Citadel and Warburg Pincus declined to comment.

Selling the venture at a previously agreed valuation by the Chinese partner would be challenging as foreign investors keep backing away from the Chinese market amid persistent concerns. China’s onshore equity benchmark has slumped to its lowest in nearly five years this week in a dismal start into 2024.

Credit Suisse Securities (China) has about one billion yuan of asset value, one of the sources said.

In 2019, the bank agreed to pay 628.5 million yuan, or US$89 million at the time, to increase its stake in Credit Suisse Founder Securities to 51 per cent from 33 per cent. It received approval the following year to become majority shareholder in the venture but had yet to receive a greenlight to implement its onshore expansion after more than a two years wait, further delayed by a senior management exodus in 2022.

The venture now mainly consists of investment banking and brokerage operations. The bank recently dismissed its entire wealth management team onshore as UBS Group decided not to take on the staff. BLOOMBERG