Source: The Canadian Press

Canaccord Financial Inc. (TSX:CF) is expanding its global capital arm into the world’s most populous country through the acquisition of The Balloch Group, a small investment bank formed by a former Canadian ambassador to China.

Through Balloch, which will be renamed Canaccord Genuity Asia, the Canadian firm will advise Chinese clients expanding abroad and foreign clients seeking to enter China — and facilitate Chinese financing on international projects.

Howard Balloch, Canada’s ambassador to China from 1996 to 2001, will remain with the company he founded in 2001 and become chairman of Canaccord Genuity Asia. He’ll also be appointed a director of Canaccord Financial.

“I look forward to working with my new partners at Canaccord Genuity,” Balloch said in a statement.

Canaccord has agreed to pay $4 million up front to purchase The Balloch Group and up to 1.19 million common shares, currently worth about $13.5 million, over a five-year period if revenue targets are met.

The acquisition is expected to close on Jan. 3, 2011, the company announced late Monday.

Canaccord, which has its principle offices in Vancouver and Toronto, also announced Monday a new cooperative agreement with the Export-Import Bank of China, a state-owned and controlled entity.

Canaccord said the agreement with China Eximbank requires no financial commitment and provides an opportunity for the organizations to partner on projects in the energy, mining and infrastructure sectors.

“We are committed to better serving our clients in this important growth market and growing Canaccord’s platform in Asia,” Canaccord Financial president and CEO Paul Reynolds said in a statement. “

“Our new partners from The Balloch Group and our collaboration with the Export-Import Bank of China will anchor our expansion efforts in the region.”

Given the growth and importance of China’s economy, now second in size only to that of the United States, a number of Canadian banks, insurance companies and other financial services businesses have been entering the market.

Canaccord, which operates in the wealth management and capital markets segments of the financial industry, has been saying for months that it was investigating ways to increase its presence in the Asia region.

Canaccord Genuity, the company’s international capital markets division, currently operates in the United States, United Kingdom, Canada and Barbados.