CITIC Securities To Establish First Wholly-Owned Offshore Subsidiary In Australia -Source

China's largest investment bank, CITIC Securities Co. Ltd. (600030.SH), is planning to set up its first wholly-owned offshore subsidiary in Australia to take advantage of burgeoning interest in the country's resources boom, a person familiar with the situation said Wednesday.

The bank, a subsidiary of state-owned CITIC Group, has established a working group in Sydney with a view to capturing business from Chinese companies making resources acquisitions in the country, the person said.

"They're chasing their customers," the person said, adding that despite a mining focus the bank would also assist agricultural, energy and real estate companies.

"CITIC is a state-owned company and many of these large corporations are also state-owned, so they probably feel safer giving business to CITIC," the person said.

Chinese state-owned companies have invested heavily in Australian resources businesses in recent years. Yanzhou Coal Mining Co. Ltd. (YZC) last year purchased Felix Resources Ltd. for A$3.5 billion, the largest acquisition of an Australian company by China, while China Minmetals purchased most of the assets of OZ Minerals Ltd. (OZL.AU) for US$1.4 billion to create Minerals and Metals Group earlier that year.

A 50-50 joint venture of Royal Dutch Shell Plc (RDSA) and PetroChina Co. (PTR), the listed arm of state-owned China National Petroleum Corp., purchased coal seam gas company Arrow Energy for A$3.5 billion last month.

The person stressed that work on the operation was very preliminary, due to China's drawn-out foreign investment approval process.

The license would need to be approved successively by the China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Commerce, and State Administration of Foreign Exchange.

Zijin Mining Group Co. Ltd.'s (601899.SH) A$545 million attempted takeover of Philippines-focused copper-gold miner Indophil Resources N.L. (IRN.AU) fell apart earlier this year after the Chinese company failed to win regulatory approval from a local provincial government.

"Many of these companies are already advised by CITIC's offices in China on their offshore investment strategies or had CITIC managing their IPOs," the person said.

CITIC Securities was lead sponsor of Agricultural Bank of China's (601288.SH) US$22.1 billion IPO, the world's biggest float to date, and acted as joint bookrunner in Metallurgical Corp. of China Ltd.'s (601618.SH) US$5.1 billion listing last year.

CITIC Group's Hong Kong-based subsidiary CITIC Pacific Ltd. (CTPCY) is acting in joint venture with Metallurgical Corp. on the Sino Iron project, a plan to export 27.6 million tons a year of magnetite iron ore pellets from Cape Preston in Western Australia state's iron-rich Pilbara region.

CITIC Securities' only subsidiaries outside mainland China are currently its Hong Kong division and a joint venture announced last year with U.S. boutique investment bank Evercore.

CITIC was established in 1979 under Deng Xiaoping with the purpose of increasing China's exposure to trade and overseas capital.

 
   -By David Fickling, Dow Jones Newswires; [phone]; [e-mail]