Lehman eyes brokerage JV as part of China push

By Jason Subler

BOAO, China (Reuters) - U.S. investment bank Lehman Brothers LEH.N is looking to team up with a local partner to establish a joint venture brokerage in China, as part of a drive to significantly expand its presence there, an executive said.

Lehman joins a growing list of Western financial firms that are planning to set up brokerage JVs after the government lifted a two-year moratorium on new approvals late last year. Rules require them to work with local partners.

Zhizhong Yang, chairman of Lehman Brothers China, told Reuters that the firm had been in "active discussions" with prospective partners for the venture.

"We are talking to a number of potential partners; this is definitely something that we want to do. The firm's management is very focused on building a platform in China," Yang said in an interview over the weekend.

"Our vision for the China business is to offer our clients the full range of the firm's products and services," he said, speaking on the sidelines of the Boao Forum for Asia on the southern Chinese island of Hainan.

Yang declined to name the securities firms Lehman was in talks with or to estimate when it might be able to launch a JV.

"I hope it won't be too long. The government has lifted the moratorium, so we want to take the opportunity," he said.

"Once we have the domestic platform ... then we would have to grow our headcount in accordance with the opportunities."

CLEAN COAL

Lehman also plans to keep beefing up other arms of its China investment banking business, Yang said, helping both major domestic firms and smaller private firms with overseas share offerings, as well as mergers and acquisitions.

"Last year, our China investment banking revenue was almost three times the revenue in the previous year," he said, adding that he expected further "significant" revenue growth this year.

The firm also plans to expand its principal investments in China, Yang said.

He declined to estimate how much Lehman would invest in the near term, but said it was looking at opportunities in the financial services industry, as well as consumer and retail, real estate and technology.

The recent credit crunch would not hinder that expansion, Yang said. "I think the company will be very willing to put up a reasonable amount of money in one single investment. It's not constrained by capital."

Lehman shored up its capital base on April 1 by selling $4 billion in convertible preferred securities.

Yang added that Lehman was looking into getting involved in the clean and alternative energy markets in China.

"It could involve investing in clean coal and clean energy projects. We have invested in similar projects in the U.S., and we'd like to do something in China as well. It's still in the planning stage, though," he said.

(Reporting by Jason Subler; Editing by Alan Wheatley and Ken Wills)