On April 26, the securities sector led the rise of A-shares, up 6.46%, Founder Securities, Zheshang Securities and other brokerages directly rose to the limit, which may be related to the acquisition of Guolian Securities, last night, Guolian Securities issued an announcement that it will acquire Minsheng Securities, and the stock will be suspended from today.
1. Guolian Securities will provoke a wave of mergers and acquisitions of securities firms
The acquisition of Guolian fired the first shot of brokerage mergers and acquisitions after the "new formulation", encouraging brokerage mergers and acquisitions is the will of the management, and it is also the trend of the industry, a modern power is bound to be a financial power, and one of the six core elements of "financial power" is to build a "strong financial institution", our country has a large number of brokers, but the strength needs to be improved, especially the investment banks with international vision and ability are still very lacking.
The United States is not only the strongest country in the global economy, but also the strongest financial country, China as the world's second strongest economic power, the economic volume is about 70% of the United States, but the gap between the investment banks is originally the gap in economic scale, the largest investment bank in the United States is Morgan Stanley, the current market value is 150 billion US dollars, about 1 trillion yuan, China's largest investment bank is CITIC Securities, the market value is less than 300 billion.
Morgan Stanley's total assets are 1.2 trillion US dollars, and the total assets of CITIC Securities are 1.6 trillion yuan, which is less than 20% of Morgan Stanley, and Morgan Stanley's revenue is 54 billion US dollars, nearly 400 billion yuan, while CITIC Securities' revenue is only 60 billion yuan, and China's investment bank is only one-sixth of that of a US investment bank.
There are a large number of brokers/investment banks in China, but the volume is generally not large, only one CITIC Securities with total assets of more than 1 trillion, only 10 with more than 500 billion, and only 21 with more than 100 billion.
Guolian Securities merger and acquisition of Minsheng Securities is an example, as early as November last year, the China Securities Regulatory Commission pointed out that the support of securities companies through group management, mergers and acquisitions and other ways to become bigger and stronger, last year from time to time there was news of brokerage mergers, such as Zheshang Securities plans to acquire Guodu Securities, Huachuang Securities and Pacific Securities mergers and acquisitions, now, Guolian Securities mergers and acquisitions of Minsheng Securities will provoke the climax of mergers and acquisitions of brokers, in fact, on April 12 this year, the introduction of the "National Nine Articles" also indicates that the support for the head brokerage through mergers and acquisitions to enhance competitiveness.
In terms of single volume, Guolian Securities can only rank 24th among listed brokers, with total assets of less than 90 billion, and the total assets of Minsheng Securities in 2022 will be less than 60 billion.
2. How is the merger and acquisition of Guolian Securities designed?
Guolian Securities' acquisition of Minsheng Securities is a major asset restructuring, which we can also know through public data, because the assets of Minsheng Securities exceed 50% of Guolian Securities, but because the actual controller has not been changed, it is not a restructuring and listing.
Minsheng Securities benefited from the influence of Minsheng Bank and the former controlling shareholder Oceanwide Holdings, its reputation is greater than that of Guolian Securities, Oceanwide Group's poor management, bankruptcy reorganization, and its equity in Minsheng Securities was auctioned, in March 2023, Wuxi Guolian Group auctioned 30.3% of Minsheng Securities at a total price of 9.1 billion yuan in excess of the starting price of 3.24 billion yuan, and the valuation of Minsheng Securities at that time was 30 billion, which was basically the same as the market value of Guolian Securities at that time.
Up to now, the shareholding structure of Minsheng Securities is as follows, Wuxi Guolian Group holds 30.49% of the shares, is the only major shareholder, Wuxi Guolian Group is behind the Wuxi State-owned Assets Supervision and Administration Commission, is a proper state-owned assets, Wuxi State-owned Assets Supervision and Administration Commission has also become the actual controller of Minsheng Securities.
The intention behind this should be related to Guolian Securities, which is a securities company in Wuxi, the major shareholder and controlling shareholder is Wuxi Guolian Group, and the Wuxi State-owned Assets Supervision and Administration Commission is the actual controller, which is a local state-owned enterprise in Wuxi. Wuxi Guolian Group directly and indirectly controls 48.6% of the shares of Guolian Securities, and is the largest shareholder and controlling shareholder.
Brokerage to through endogenous development to a higher level is still relatively slow, but through mergers and acquisitions, can be quickly bigger, Guolian Securities ranked 24 in the listed brokers, this ranking is medium, belongs to the level of medium brokers, Guolian Group through the acquisition of Minsheng Securities, and then Minsheng Securities into the listed company Guolian Securities, this way can achieve leapfrog development, Guolian Securities will also become a 100 billion level brokerage, ranking greatly advanced.
The merger and acquisition of Minsheng Securities is carried out by issuing shares to purchase assets, Guolian Securities issued shares to 45 shareholders of Minsheng Securities, and purchased a total of 95.48% of the shares held by these 45 shareholders, and after the transaction is completed, Minsheng Securities will become a subsidiary of Guolian Securities, with the former holding 95.48% of the shares of the latter.
The original shareholders of Minsheng Securities will become the direct shareholders of Guolian Securities, and these shares can be directly realized in the secondary market, of course, there is a certain lock-up period in accordance with the regulations, Guolian Group is the controlling shareholder of Guolian Securities and Minsheng Securities, so after the completion of the transaction, it is still the controlling shareholder of Guolian Securities.
According to the current laws and regulations and actual operation, the pricing of shares issued by Guolian Securities cannot be lower than 80% of the benchmark date price, which is generally 80% of the average price of 20 trading days, 60 trading days or 120 trading days before the announcement date, and the average price is about 11 yuan, which is issued at 80% of the price, that is, not less than 8.8 yuan.
The current P/E ratio of Guolian Securities is 44 times, which is at a high level, even if it is discounted, it is about 35 times, but for the pricing of the acquired assets, it will generally not exceed 20 times the P/E ratio, which is equivalent to using the stocks with a higher valuation of Guolian Securities to acquire Minsheng Securities with a lower P/E ratio.
Of course, the shareholders of Minsheng Securities will also agree, the biggest advantage is that the shares can be realized, saving the trouble of separate listing, and because the controlling shareholder already has Guolian Securities, a listed brokerage, the possibility of Minsheng Securities being listed separately is very small, unless Guolian Group withdraws from the ranks of controlling shareholders.