China Fund News Chenxi
The mergers and acquisitions of the securities industry are heating up, and Guolian Securities has taken the first step.
On the evening of April 25, Guolian Securities issued the "Announcement on the Suspension of Trading on Planning Major Asset Restructuring". Guolian Securities said that the company is planning to acquire control of Minsheng Securities and raise matching funds by issuing A shares, and the company's shares will be suspended from the opening of the market on April 26.
Guolian Securities has been preparing for the restructuring quite quickly, and has signed an agreement of intent with 45 shareholders of Minsheng Securities on April 25 to acquire 95.48% of the equity of Minsheng Securities. If the transaction is successfully completed, Minsheng Securities will become a holding subsidiary of Guolian Securities.
Guolian Securities' move also indicates that after Guolian Group obtained a controlling stake in Minsheng Securities, the restructuring and integration of the two securities companies entered the substantive stage. According to reports, the successful completion of the integration of the two companies will become the first mention of "building a first-class investment bank" at the Central Financial Work Conference, and the securities company will enhance its core competitiveness through mergers and acquisitions.
Guolian Securities plans a major asset restructuring to acquire 95.48% of the shares of Minsheng Securities
On the evening of April 25, Guolian Securities issued the "Announcement on the Suspension of Trading on Planning Major Asset Restructuring". Guolian Securities said that the company is planning to acquire control of Minsheng Securities and raise matching funds by issuing A shares.
In view of the uncertainty in this matter, the A shares of the applicant company will be suspended from the market open on April 26, 2024 (Friday), and the suspension is expected to last no more than 10 trading days.
As the transaction is still in the planning stage, Guolian Securities has not announced specific information such as transaction price and valuation. However, the preliminary work of Guolian Securities' restructuring was prepared quite quickly. Guolian Securities said that the company is currently in contact with the shareholders of the target company, and has signed the "Cooperation Intent Agreement" with 45 shareholders of Minsheng Securities on April 25, intending to acquire 95.48% of the equity of Minsheng Securities.
Previously, Minsheng Securities had defected to Shanghai State-owned Assets and moved its registered address to Shanghai. However, the list of shareholders who have signed the agreement of intent this time also includes Shanghai Fengquanyu Enterprise Management Co., Ltd. and other Shanghai state-owned shareholders. In contrast, at present, only Hangzhou Dongheng Petroleum Co., Ltd. has not signed a cooperation intention agreement with Guolian Securities, and its equity ratio of Minsheng Securities is 4.52%, which is not a major shareholder holding more than 5% of the shares.
In addition, in the early stage, Guolian Securities plans to carry out a fixed increase of no more than 5 billion yuan, which will be used to expand the trading business of fixed income, equity, equity derivatives, etc., repay debts, and further expand the scale of credit trading business including margin financing and securities lending. In view of the fact that it is planning to acquire Minsheng Securities and raise matching funds, Guolian Securities decided to terminate the private placement and withdraw the relevant application documents.
As of the close of trading on April 25, the share price of Guolian Securities was 10.46 yuan per share, and the current total market value was 29.6 billion yuan.
In addition to the official announcement of Guolian Securities, Luxin Venture Capital also announced that night that its wholly-owned subsidiary, Shandong High-tech Investment, intends to sell 3.83% of its shares in Minsheng Securities to Guolian Securities, and subscribe for the newly issued A shares of Guolian Securities with the underlying assets.
Restructuring and integration have entered the substantive stage, which is expected to hit the top ten in the industry
The official announcement of Guolian Securities' acquisition of Minsheng Securities means that after Guolian Group won the controlling stake in Minsheng Securities in the early stage, the restructuring and integration of the two securities companies has entered the substantive stage.
In December 2023, the China Securities Regulatory Commission issued the "Reply on Approving the Change of Major Shareholders of Minsheng Securities Co., Ltd.", approving Guolian Group to become a major shareholder of Minsheng Securities, and had no objection to Guolian Group's transfer of about 3.471 billion shares of Minsheng Securities (accounting for 30.3% of the total share capital) in accordance with the law.
At that time, the China Securities Regulatory Commission (CSRC) requested in its reply that Minsheng Securities should work with Guolian Securities and Guolian Group to promote the integration of Minsheng Securities and Guolian Securities in a steady and orderly manner. Guolian Group also said that it will promote the integration of Minsheng Securities and Guolian Securities in a steady and orderly manner, always adhere to the market-oriented mechanism and development direction, give full play to the advantages of state-owned shareholders' resources, Minsheng Securities' business characteristics and human resources, achieve the "1+1>2" goal, and continuously improve its comprehensive financial service capabilities.
Guolian Securities said that the official start of the integration process between Guolian Securities and Minsheng Securities is not only an important measure to actively respond to the spirit of the Central Financial Work Conference and implement the new "National Nine Articles" and various policy requirements, but also a strategic measure to adhere to its business origin, become better and stronger, and build a large-scale securities company with distinctive business characteristics, market ranking and strong competitiveness, and better serve the high-quality development of the economy and society. The successful completion of the integration of the two companies will become a benchmark case in the industry for securities companies to enhance their core competitiveness through mergers and acquisitions after the Central Financial Work Conference first mentioned "building a first-class investment bank".
According to the acquisition plan of Guolian Securities, if the transaction is successfully completed, Minsheng Securities will become a holding subsidiary of Guolian Securities. According to public data estimates, after the completion of the integration of Guolian Securities and Minsheng Securities, the main businesses such as investment banking, fixed income, research, and asset management will rank among the first echelon of the industry and become a quasi-head brokerage.
In comparison, the two businesses have certain complementary advantages, Guolian Securities has formed competitive advantages in wealth management, asset management, fixed income and derivatives, etc., while Minsheng Securities has explored new growth engines in "investment + investment banking + investment research". In terms of region, Guolian Securities is based in the Yangtze River Delta and deeply cultivates Wuxi, radiating key regions, while Minsheng Securities branches are mainly concentrated in Henan and Shandong.
Guolian Securities said that in the future, with the further opening of the ceiling of investment banking, wealth management and other businesses, the company is expected to hit the top 10 in the industry, squeeze into the sequence of head brokers, and achieve higher-quality development.
In terms of performance, Guolian Securities' 2023 annual report shows that its operating income in the current period was 2.955 billion yuan, and the net profit attributable to the parent company was 671 million yuan. As of the end of the reporting period, the total assets of Guolian Securities were 87.129 billion yuan, an increase of 17.14% over the end of the previous year.
Minsheng Securities has not yet released its 2023 annual report. However, judging from the data of the third quarter of 2023, Minsheng Securities achieved an operating income of 3.644 billion yuan and a net profit attributable to the parent company of 903 million yuan. As of the end of the third quarter of 2023, the total assets of Minsheng Securities were 56.608 billion yuan.
The curtain of mergers and acquisitions in the securities industry opened
In recent years, with the continuous introduction of regulatory policies and related documents, the atmosphere of mergers and acquisitions in the securities industry has heated up.
Recently, the State Council issued the "Several Opinions on Strengthening Supervision and Preventing Risks and Promoting the High-quality Development of the Capital Market", namely the new "National Nine Articles". It is mentioned that to promote the high-quality development of securities and fund institutions, "support leading institutions to enhance their core competitiveness through mergers and acquisitions, organizational innovation, etc."
In addition, the China Securities Regulatory Commission also mentioned in the "Opinions on Strengthening the Supervision of Securities Companies and Public Funds and Accelerating the Construction of First-class Investment Banks and Investment Institutions (Trial)" that it supports leading institutions to become better and stronger through mergers and acquisitions, reorganization, organizational innovation, etc.
In retrospect, in addition to the integration of Guolian Securities and Minsheng Securities, combinations such as "Zheshang + Guodu", "Huachuang + Pacific" and "Founder + Ping An" are all being continuously promoted.
Recently, an investor asked Huachuang Yunxin a question on the SSE interactive platform, asking for an explanation of Huachuang's acquisition of the Pacific Ocean. In this regard, Huachuang Yunxin said that in January 2024, after the company's general meeting of shareholders deliberated and approved, Huachuang Securities will go to the court to obtain the execution ruling and go through the equity transfer procedures after the CSRC approves the shareholder qualifications. It also intends to obtain the corresponding director seats at the time of the re-election of the board of directors of Pacific Securities and become its controlling shareholder, so as to promote the integration of resources of both parties and further enhance regional influence.
Regarding the intra-industry competition issues that investors are concerned about, Huachuang Yunxin said that the company will coordinate and promote relevant businesses under the guidance of regulatory authorities in accordance with the principles of legal compliance, respect for the market and respect for professionalism.
Similarly, at the 2023 annual results briefing held by Founder Securities at the end of March, Shi Hua, chairman of Founder Securities, once again responded that Founder Securities will work with all parties to maximize the value of shareholders and investors, and promote relevant work in an orderly manner in accordance with the reorganization investment agreement and regulatory requirements of Founder Group. If there is any new development, the company will disclose information in a timely manner in accordance with the regulations and guidelines of the financial regulatory authorities.
In contrast, the pace of Zheshang Securities' acquisition of Guodu Securities is accelerating. At the end of March this year, Zheshang Securities acquired the shares of Guodu Securities held by Chongqing Trust, Tianjin Chongxin, Chongqing Jiahong, Shenzhen Yuanwei and Shenzhen Zhongjun, with a total of 19.1454% of the shares. After the successful transfer, Zheshang Securities will become the largest shareholder of Guodu Securities. On April 24, Guodu Securities was listed and transferred 7.69% of its shares on the Shanghai United Stock Exchange.
GF Non-Bank believes that in the context of a stricter regulatory environment, mergers and acquisitions of securities companies have become the focus of market attention. In addition to the small and medium-sized securities firms themselves seeking breakthrough development, if the central and local levels guide or promote the integration and mergers and acquisitions of their securities companies, it is expected to promote the evolution of the industry pattern.
Building first-class investment banks and investment institutions is a key issue in building a financial powerhouse. The head institutions are expected to usher in a good opportunity for the development and growth of policy support, giving priority to mergers and acquisitions and restructuring in the development mode, and the supply-side reform of the industry is expected to quickly usher in a major breakthrough, followed by organizational innovation, and the transformation of management structure, strategy and personnel is expected to glow with new growth momentum from the inside out. The top-down M&A promotion of leading brokerages is expected to accelerate, and the pattern of leading brokerages may undergo great changes. In fact, there have been many mergers and acquisitions of medium-sized securities companies such as Huachuang Yunxin, Guolian Securities, and Zheshang Securities, which may be a rehearsal for the optimization of the industry pattern.
The non-bank team of Soochow Securities said that looking back at the four waves of mergers and acquisitions in the mainland securities industry, it has gradually shifted from supervision to guide the rectification and clean-up of the industry, and gradually turned to securities companies to become bigger and stronger through market-oriented integration. Through mergers and acquisitions, securities companies can quickly form complementary locations, expand business scale, and improve profitability and competitiveness. For shareholders of listed securities companies injected into non-listed securities firms, they can also enjoy the asset appreciation brought by the "liquidity premium" through asset injection and obtain investment income. The CSRC's attitude towards mergers and acquisitions of securities companies is gradually warming, and the relevant targets involved in mergers and acquisitions are expected to benefit from mergers and acquisitions in the near future.
Editor: Captain
Review: Xu Wen