BEIJING – Canaccord Financial Inc, a Canadian financial service company, announced on Tuesday an expansion in Asia by the acquisition of a Chinese boutique investment bank called the Balloch Group.

Canaccord agreed to purchase the Balloch Group for C$4.0 million ($3.93 million). And it planned to provide 1,187,847 common shares, worth nearly C$13.5 million, with an issue price of $11.37 for its principal employees, according to the company.

The company's operations in China will be branded Canaccord Genuity Asia and it will focus on advising Chinese companies on their outbound investments, and international mergers and acquisition, particularly in the mining, energy, clean technology and life sciences fields.

"Canaccord Genuity Asia will combine the strength of our global platform and expertise in advising and raising capital for growth companies, with the Balloch Group's strong client relationships and established investment banking presence in China," said Paul Reynolds, chief executive officer of Canaccord Financial Inc.

The move follows a trend of international mergers and acquisitions for investment banks, which are all trying to better operate in the global financial market, said Xie Peijie, an analyst from Central China Securities Holding Co Ltd. "Mergers and acquisitions may facilitate competition between securities companies, and they can enlarge business scope and improve financial services by joining together," she said.

Xie said that Chinese investment banks are facing intense competition from abroad, but they can learn financial techniques as well as operation methods from overseas rivals.

"After the acquisition, we will be able to identify even more opportunities for our clients and expand our service offering," said Howard Balloch, president of the Balloch Group.

Overseas investment banks have advantages to help Chinese companies expand their business worldwide, such as issuing initial public offerings (IPOs) in global markets, said Gaby Abdelnour, chairman of Asia-Pacific JP Morgan, according to the 21st Century Business Herald.

Chinese capital markets have become more attractive for investment banks, especially after the financial crisis. The total income of investment banks in the Chinese mainland reached $3.5 billion as of the end of September and China has become the most profitable market in Asia, according to a report from Dealogic Holdings PLC, a consultant company for investment banks.

Canaccord also signed a strategic agreement with the Export-Import Bank of China. "Our collaboration with the Export-Import Bank of China will anchor our expansion efforts in the region," Reynolds said.

The acquisition is expected to close on Jan 3 in 2011. And Canaccord plans to meet revenue targets totaling C$100 million over five years in Asia.