SINGAPORE – CGS International (CGSI) – the overseas arm of leading mainland securities firm China Galaxy Securities (CGS) – took its first steps towards its ambition of becoming Asia’s version of Western global investment banks via a rebranding exercise on April 18.
In what CGSI group chief executive Carol Fong described as embarking on “a transformative journey”, she told The Straits Times the waypoints she has set for the company.
These include growing group revenues to $700 million by 2030; seeking a listing upon achieving a certain heft; and lifting its return on equity, or how efficiently the company generates profits, to between 6 per cent and 8 per cent, up from the 5 per cent achieved in 2023.
On the timeline of the group’s initial public offering, Ms Fong said that it may be some time yet as “the push to transform the business takes priority and the group will need to grow its profits to obtain a better valuation”.
The rebranding comes in the wake of its parent CGS exercising its option to acquire for RM780 million (S$221.9 million) from Malaysia’s CIMB Group the remaining stake in their joint venture – known as CGS-CIMB Securities – in December 2023.
Ms Fong believes that, by positioning CGSI as a nexus for capital flows between China and South-east Asia, the company will be able to tap its parent’s massive client base of over 15 million mainland customers, who in turn generated US$1.1 billion (S$1.5 billion) in profits in 2022.
This is the first in a three-pronged strategy to reach its objective of being a truly global investment bank.
“To become the poster child of successful dealmaking, we hope to generate $1 billion worth of deals via mergers and acquisitions,” she said.
Meanwhile, there are prospective listings in the pipeline, including a Hong Kong-listed company that is seeking a dual listing in this region.
She said that while the Singapore market is currently in the doldrums, she is optimistic that it can be revived.
“I believe that we can do this by bringing companies from both the mainland and across South-east Asia and get them listed here. We also want to kick-start dual listings of Chinese companies on the local bourse,” she said.
“The potential is there. With some 500 Chinese family offices based in Singapore, there is a ready pool of investors who are already familiar with those mainland names,” she noted.
Similarly, she sees the opportunity for many local brands that can benefit from being listed in China, adding that she has already started to pitch the idea to them.
On the wealth management front, Ms Fong underscored the synergies that exist between Singapore and China, and revealed that CGSI had already secured asset management licences in Singapore, Malaysia and Thailand.
“We are looking to do the same in Indonesia, although it may mean having to buy over an existing operation there, given the fixed number of licences available,” she said.
The ambition here is to grow assets under management to $1 billion in the near term, but she quickly clarified that it would not be in the form of traditional portfolio management.
“We want to provide companies and individuals with wealth solutions that they cannot get from many of the big banks,” she said.
For now, the group has established a secure foothold in the key Asean markets of Singapore, Malaysia, Indonesia and Thailand.
Singapore and Malaysia, in particular, stand out as key markets, contributing the bulk of CGSI’s revenues – with each generating some 25 per cent of total revenues in 2023.
Between 2019 and 2023, CGSI grew its client base by 20 per cent to well over 500,000, while revenue has risen by more than 40 per cent.
In terms of CGSI’s research team, Ms Fong said: “We have people who are locally centred, with some 70 analysts spread across six markets. They have helped the company win more than 80 awards in 2023.
“We believe that the quality of our talent pool will set us apart from other players in the region.”
