Founder Securities' New Controlling Shareholder Settles The exit of employees in the investment research department has attracted attention

Economic Observer reporter Liang Ji Founder Securities Co., Ltd. (601901, hereinafter referred to as "Founder Securities") the reorganization of controlling shareholders ushered in new progress.

On the evening of October 21, 2021, Founder Securities issued an announcement that the company received a notification letter from The Holding Shareholder Of Peking University Founder Group Co., Ltd. (hereinafter referred to as "Founder Group") on the same day, and five companies, including Founder Group, had completed the establishment of New Founder Group and obtained a business license according to the reorganization plan, and New Founder Group would become the controlling shareholder of the company.

According to the 2021 semi-annual report of Founder Securities, as of the end of the reporting period, Founder Group and its co-actor Founder Industry Holdings Co., Ltd. (hereinafter referred to as "Founder Production Control") held a total of about 2.364 billion shares of the company, with a shareholding ratio of 28.71%. According to the reorganization plan, all of this equity will be transferred to The New Founder Group.

In addition, the announcement also disclosed the shareholding structure of New Founder Group: SPE-cialPurposeVehicle (I.e. special purpose institution/company) established by Ping An Life holds about 66.5%, the SPV set up by Zhuhai Huafa Group Co., Ltd. (on behalf of Zhuhai State-owned Assets) holds about 28.5% of the shares, and the shareholding platform (partnership) composed of creditors holds about 5%.

New controlling shareholders landed

Previously, Founder Securities had attracted market attention due to the bankruptcy reorganization of founder group, the company's largest shareholder, and the compulsory disposal of the shares held by the second largest shareholder, Zhengquan Holdings.

In December 2019, Founder Group began its path into a debt crisis due to an ultra-short loan due. In August of the following year, the court ruled that Fangzheng Group and its four subsidiaries were substantially merged and reorganized, and that the shareholding structure of Fangzheng Securities had an impact.

In July 2021, the manager of Founder Group received a Civil Ruling delivered by the Beijing First Intermediate People's Court, ruling to approve the reorganization plan of Founder Group and five other companies.

According to the plan, all the shares of Founder Securities held by Founder Group and its co-actor Founder Production Control will be transferred to the proposed new Founder Group. Ping An Life Insurance Company of China Limited (hereinafter referred to as "Ping An Life") or its wholly-owned entities intend to acquire 73%-100% of the equity of New Founder Group in accordance with the proportion of 70%, Ping An Life or its wholly-owned entities become the controlling shareholders of New Founder Group, and Ping An Insurance (Group) Co., Ltd. of China (hereinafter referred to as "Ping An") indirectly controls Founder Securities as the controlling shareholder of Ping An Life.

According to the relevant announcement, Founder Group and its co-actor Founder Production Control hold a total of 2.363 billion shares of Founder Securities, with a shareholding ratio of 28.71%, which will be held by New Founder Group according to the reorganization plan.

Ping An staff of China previously told the Economic Observer that under the premise of complying with laws and regulations and regulatory policies, the company will give full play to the advantages of comprehensive financial services and technology empowerment in the future to promote the healthy and sustainable development of New Founder Group and its various businesses.

In addition to the arrival of Ping An of China, China Cinda Asset Management Co., Ltd. (hereinafter referred to as "China Cinda"), one of the four major state-owned asset management companies (AMC), also ranks as the third largest shareholder of Founder Securities. In September 2021, Founder Securities announced that Zhengquan Holdings had repaid 8.62% of the company's shares to Guotong Trust, which distributed trust benefits to the trust beneficiary China Cinda in the original state of the trust property in accordance with the trust contract. China Cinda became the third largest shareholder of Founder Securities.

The performance is eye-catching but it is facing the tide of departures

Relevant performance data show that the operating conditions of Founder Securities have not been affected too much by shareholder changes. Founder Securities' 2021 third quarter report forecast shows that the company achieved revenue of 6.459 billion yuan in the first three quarters, an increase of 12.82% year-on-year; net profit of 1.928 billion yuan, an increase of 30.08% year-on-year.

Founder Securities said in the announcement that due to factors such as the current period and the growth of subsidiary performance, the company's operating income has increased, so the operating profit, total profit and net profit attributable to shareholders of listed companies increased by 32.56%, 36.88% and 30.08% respectively over the same period last year. At present, the company's various businesses are developing steadily, the asset structure is good, the liquidity is strong, and the risk control indicators meet the requirements of the "Measures for the Management of Risk Control Indicators of Securities Companies".

It is worth noting that Founder Securities has recently experienced a "wave of departures", involving personnel from multiple departments.

According to the information of the China Securities Association, from July to August 2021, the practice institutions of 6 chief analysts, including Hu Guopeng, chief analyst of founder securities research institute, Li Yonglei, chief analyst of chemical industry, Sheng Changsheng, chief analyst of building materials, Yao Lei, chief analyst of media, Licensing, chief analyst of Jiaoyun, and Cheng Yisheng, chief analyst of agriculture, were successively changed to Guohai Securities.

By September, Yang Renwen, former director of founder securities research institute, also handled his resignation. Relevant resumes show that Yang Renwen has served in China Merchants Securities and Huachuang Securities Research Institute. He joined Founder Securities in 2014 and served as executive vice president, chief analyst and research institute director of the media and Internet industry, and won the first, second and second places of New Fortune Best Analyst from 2015 to 2017.

Some market participants believe that in addition to the normal flow of analysts among securities companies, changes in the shareholder level of Founder Securities may also be an important incentive. According to the data, Ping An of China has directly and through Ping An Trust holds 96.62% of the shares of Ping An Securities, so there are frequent voices in the market that Ping An of China may intentionally merge Founder Securities and Ping An Securities.

According to the performance ranking information of securities companies in 2020, the net capital of Founder Securities and Ping An Securities was 24.83 billion yuan and 28.417 billion yuan, ranking 19th and 15th in the industry, respectively; revenue was 6.933 billion yuan and 9.099 billion yuan, ranking 19th and 15th in the industry, and net profit was 1.096 billion yuan and 3.064 billion yuan, ranking 33rd and 14th in the industry, respectively.

Some market participants told the Economic Observer that controlling Founder Securities is an important benefit obtained by Ping An of China in participating in the restructuring of Founder Group, because Founder Securities is a relatively high-quality asset of Founder Group. For Ping An of China, the control of Founder Securities, on the one hand, can form a synergy effect with its Ping An Securities, and even quickly become bigger and stronger through mergers, ranking among the first echelon sequences in the industry. On the other hand, it can further expand the scope of Ping An Group's securities services, expand the market share of Ping An Securities' business in the northern market, and further enhance ping An Group's competitive advantage as a comprehensive financial group.

This time, as the dust settles on the new controlling shareholders, where Founder Securities will go, the Economic Observer will continue to pay attention.