Latest News
Vermilion advises Diageo plc on landmark China transaction
Vermilion Partners Limited (“Vermilion”), the leading independent investment banking advisory firm in China, today announced that it acted as the lead adviser for Diageo plc (“Diageo”) in the purchase by the world’s leading premium drinks business of a significant stake in China’s spirits market.
Following approval from Chinese regulators, Diageo will acquire a 4% stake in Sichuan Chengdu Quanxing Group Company Ltd. (“Quanxing”), lifting its total holding to 53%. As a result of this purchase, Diageo will become the indirect controlling shareholder of Sichuan Shuijingfang Co., Ltd. (“Shuijingfang”), a leading super-premium CWS company, which is listed on the Shanghai Stock Exchange.
Vermilion assisted Diageo to become the first foreign spirits company to gain approval to control a super premium Chinese white spirits company in China. The transaction is also one of the first instances of a foreign company acquiring indirect control of a Chinese listed entity.
This important deal comes four weeks after Vermilion successfully completed its role as the exclusive financial adviser to Royal Bank of Scotland Group Plc (“RBS”) in the bank’s major expansion into the Chinese securities market. RBS signed a Joint Venture with Guolian Securities Co. Ltd, which means that RBS is the first UK bank to have won access to the burgeoning market in China for the underwriting of stocks and bonds.
Diageo’s Asia-Pacific President, Mr Gilbert Ghostine said: “Vermilion’s deep knowledge of and experience in China was invaluable as we engaged both with our Chinese partners and with the central government and Sichuan provincial government authorities.”
“Vermilion has supported us as advisors throughout our engagement with Quanxing and Shuijingfang. This began with the partner selection process and continued through our initial acquisition of a 43% stake in 2006, the subsequent acquisition of a further 6% in 2008 and in the transaction to acquire this additional 4%. Vermilion has done an outstanding job in helping us to obtain approval from Chinese regulators following the application we submitted last year,” Mr Ghostine added.
Peter Batey, Chairman, Vermilion Partners Limited, said, “This investment is a major achievement, which further demonstrates Vermilion’s ability to negotiate and complete ground-breaking transactions in China.”
8 July 2011
Vermilion advises RBS on Joint Venture with Guolian Securities Co. Ltd
The Royal Bank of Scotland Group Plc (“RBS”) today announced the launch of its Joint Venture (“JV”) with Guolian Securities Co. Ltd (“Guolian”).
Vermilion Partners Limited (“Vermilion”) acted as the exclusive financial adviser to RBS for this transaction, making RBS the first UK bank to gain approval to form a JV to underwrite stocks and bonds in China’s fast-growing financial market.
In November 2010, RBS received approval from China’s securities regulator to create a securities JV in China with Guolian, a Chinese brokerage firm. Guolian holds a 66.7% stake in the JV, Hua Ying Securities Co. Ltd., while RBS holds 33.3%, the largest stake a foreign financial institution is permitted to hold under Chinese regulations.
This type of licence, which allows the underwriting of securities in China and access to a large and coveted market is something which leading investment banks have long sought.
China’s IPO market is currently the largest in the world, accounting for more than a quarter of the USD285 billion raised globally in 2010.
Guolian Securities has approximately 1,200 employees and 30 outlets.
“Vermilion’s deep knowledge of and experience in China’s securities industry, as well as structuring and negotiating joint ventures was critical in allowing us to execute this transaction promptly and efficiently”, said John McCormick, RBS’s Asia-Pacific chairman.
Vermilion’s team has a track record of successfully completing mandates in China, including other precedent setting transactions such as the first China Index Fund and the first majority foreign owned logistics joint venture in China.
Peter Batey, Chairman, Vermilion Partners Limited, commented, “This landmark joint venture is further illustration of Vermilion’s ability to complete transactions in the more regulated sectors of China’s economy.”
30 May 2011