China Energy Company has agreed to acquire 20 percent of U.S. financial services firm Cowen Group for $100 million and loan out an additional $175 million in what the two groups called a "long-term strategic investment," according to a report from the Financial Times.
The Chinese conglomerate, which focuses on energy, finance and banking, will buy a 19.9 percent stake from Cowen at $18 per share, or a 29.5 percent premium to Cowen's closing share price earlier on Tuesday. Cowen's shares surged 9 percent to $15.15 on Wednesday.
"We have been looking for strategic partners who could help us scale our business outside the U.S., particularly in China," Jeffrey Solomon, Cowen's president told the Financial Times. "It has a burgeoning technology culture and an energy and alternative energy culture--all industries that play really well to Cowen's strengths."
The deal also provides Cowen with $175 million in debt financing, which will mature in six years and used for acquisition and internal investment. China Energy will also be given the right to appoint three directors to the New York-based company's board.
Solomon said the partnership, which was initiated by China Energy in January, would enable Chinese investors to tap into the U.S. market and allow Cowen to access capital flows from China.
The money would enable Cowen to invest in its business with leveraged finance and equity finance being two areas it is interested in developing, he said.
Both the sale and loan are expected to close by the end of the third quarter this year and will be subjected to regulatory and government approvals.
The move comes a day after U.S. electric car maker Tesla announced that Chinese e-commerce company Tencent has acquired a 5 percent stake in the company for $1.78 billion.
Citing insider sources, the Financial Times also reported that Cowen is in talks to buy Convergex, a brokerage firm based in New York.
Solomon declined to comment on the report.