By Scott Kanowsky
Investing.com -- Shares in Credit Suisse Group AG (SIX:CSGN) climbed on Monday on a Wall Street Journal report that Saudi Arabia's Crown Prince Mohammed bin Salman and U.S. private equity investors are preparing to build stakes in the lender's new investment bank.
Sources close to the matter told the paper that Prince Mohammed is mulling over an investment of around $500 million in the unit, known as Credit Suisse First Boston. The spin-off of the New York-based division comes as Credit Suisse is looking to restructure its operations and raise $4.2B in fresh stock following a series of scandals, regulatory issues, and weak financial performance.
The WSJ added that it is unclear if Prince Mohammed will make the investment through Saudi National Bank, which is already set to become the largest shareholder in Credit Suisse after the stock sale, or via a separate vehicle. Prince Mohammed is also the chairman of Saudi Arabia's sovereign wealth fund, Public Investment Fund.
Riyadh's interest reportedly stems from CS First Boston's decision to tap well-known dealmaker Michael Klein as CEO-designate, the WSJ said. Klein has built strong connections with the kingdom, following his involvement with major business initiatives like the initial public offering of Saudi Arabian Oil Co. in 2019.
However, no firm investment offer has been sent by any Saudi entity to Credit Suisse yet, the WSJ reported.
People close to the discussions also told the WSJ that further backing could come from various U.S. investors, including high-profile banker Bob Diamond's Atlas Merchant Capital. It has previously said that it has secured a commitment of $500M from an unidentified investor.
Credit Suisse chairman Axel Lehmann said last week that it will take around two years for CS First Boston to become fully independent, with analysts predicting that the process will be drawn-out and complex.