Xinhua Finance Ltd, a provider of Chinese financial information, agreed to
pay US$45 million for closely held Glass, Lewis & Co, a provider of
investment research to institutional investors, as growth in China's bond market
creates demand for risk-assessment services.
Shanghai-based Xinhua,
whose shares trade on the Tokyo Stock Exchange, bought 20 per cent of Glass
Lewis in August and expects to close the purchase of the remaining stake in
early 2007, bringing the transaction's total value to US$45 million, said Daniel
Connell, Xinhua Finance's chief operating officer, in a telephone interview from
New York.
China is trying to develop its corporate bond market. Chinese
companies raised a total of 65.4 billion yuan (US$8.4 billion) by selling bonds
last year, twice the amount of 2004, according to the Chinabond
website.
"International investment managers, especially hedge funds, are
very eager for greater transparency and information disclosure as they invest
more in China's stock market and as more and more Chinese firms list overseas,"
Connell said.
Xinhua Finance will use Glass Lewis' expertise to expand
into proxy research and forensic accounting in China, he said.
The San
Francisco-based research unit wanted to expand through acquisitions in emerging
markets, said Greg Taxin, chief executive officer of Glass Lewis.
"Our
research team and processes will all remain," said Taxin in a telephone
interview from New York. "We're expecting expansion not just in Asia but in the
United States and elsewhere."
Shares in Xinhua Finance rose 5.8 per cent
to 58,000 yen (US$491.82) at Friday's close in Tokyo.
NIS Group Ltd, a
Tokyo-based consumer and business loan company, is Xinhua Finance's largest
shareholder with 13.0 per cent of the firm's shares. Patriarch Partners LLC, a
New York-based investment firm, holds 7.1 per cent of Xinhua Finance and UBS AG
holds 5.9 per cent.
Xinhua Finance, part-owned by China's Xinhua News
Agency, bought economic and political advisory firm Washington Analysis for
US$224.2 million in July 2005.
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