CLSA Ltd to acquire 24.9 percent stake in Alfalah Securities

CLSA Ltd, a world renowned Hong Kong based investment and brokerage group, is now returning to Pakistan, 17 years after leaving the country in 2001.

According to Bloomberg News, as part of its expansion plan to enter markets that are part of the Chinese government’s Belt and Road Initiative, the global Asian investment group has agreed to buy a 24.9 percent stake in the securities unit of Bank Alfalah, which is backed by the World Bank’s International Finance Corp.

“Our strategy is to establish an on-the-ground presence in all major Asian markets, with a particular focus on the markets in the Belt and Road Initiative,” said CEO of CLSA Jonathan Slone.

Mr Aliuddin Ansari, who was the CEO of a major Pakistani conglomerate, and also the former CEO of the local unit of Credit Lyonnais Securities Asia (CLSA), will be chairing the joint venture with Alfalah securities. Mr Ansari, along with the CEO of Alfalah Securities Atif Khan will be acquiring a combined stake of 12.5 percent, while the deal is expected to be completed by November this year.

CLSA’s entry into the country comes at a time when multi billion dollar investments for the China-Pakistan Economic Corridor come pouring into the country. In addition, CLSA has probably taken into account the fact that Pakistan’s status was upgraded to emerging-market from a frontier state in MSCI Inc.’s global indexes. Timing of the announcement also follows the change in elected government, as the new cabinet takes office in the country.

“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.

Slone predicts the MSCI upgrade will boost flows into Pakistan even though the market “is currently small” and the short-term outlook “remains challenging.”

According to Bloomberg, CLSA’s Pakistan venture will be called Alfalah CLSA Securities Ltd. and will provide equity broking, research and investment banking services.