KARACHI: Hong Kong-based brokerage firm CLSA Ltd is returning to Pakistan after almost two decades, as it looks to expand into markets that are part of the Chinese government’s Belt and Road Initiative.
CLSA, which is the international brokerage of China’s Citic Securities Ltd, has entered into a strategic partnership with Bank Alfalah by agreeing to buy a 24.9 percent stake in the bank’s securities unit, the company said in a statement on Thursday.
The joint venture will be called Alfalah CLSA Securities Ltd and provide equity broking, research and investment banking services.
It will be chaired by Aliuddin Ansari, who was chief executive officer at one of Pakistan’s largest conglomerates and previously also CEO for the local unit of Credit Lyonnais Securities Asia (CLSA).
Ansari and current Alfalah Securities CEO Atif Khan will acquire a combined 12.6 percent stake. The deal is expected to be completed by November.
“The cost of entry into the market is reasonable and while it remains under-owned, it is a good time to establish a formal presence,” CLSA CEO Jonathan Slone said in an interview, Bloomberg reported. “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.”
CLSA wrapped up its operations in Pakistan in 2001 due to “considerable instability” at the time, Slone said. The CEO predicts the MSCI upgrade will boost flows into Pakistan even though the market “is currently small” and the short term outlook “remains challenging.”
Pakistan was upgraded from frontier to emerging-market status in MSCI Inc.’s global indexes last year, sending a signal to the international market that the country was ready to attract a wider class of investors, along with the $60 billion China-Pakistan Economic Corridor.