It is proposed to acquire 50% of the equity of Galaxy Fund Galaxy Securities, another capital management city
Luo Ji
Recently, Galaxy Securities (601881. SH) announced that it plans to acquire controlling shareholders Galaxy China 50% equity of Galaxy Fund Management Co., Ltd. (hereinafter referred to as "Galaxy Fund") held by Financial Holding Co., Ltd. (hereinafter referred to as "Galaxy Financial Holding"). Galaxy Securities said that the transaction will promote the implementation of the company's "big asset management" strategy.
On the one hand, if the acquisition is implemented, the asset management line of Galaxy Securities will bypass the independent application and approval process and quickly win the public offering license of the securities firm.
On the other hand, considering that Galaxy Securities may actually control Galaxy Fund after the acquisition is completed, the parent company will complete the consolidation of Galaxy Fund according to the accounting standards. In 2017, Galaxy Fund realized an operating income of 584 million yuan and a net profit of 179 million yuan.
Get the public offering license quickly
With the industry adjustment brought by the new asset management regulations, the asset management channel business of securities companies has gradually tightened, and the transformation to active management has become an inevitable trend of its development. In this context, those who have always gained good reputation and brand effect through active management Orient Securities The path of asset management (hereinafter referred to as "Dongzheng Asset Management") has become a reference for interbank transformation. One of its model cores is the acquisition of public offering licenses.
Public information shows that before the issuance of the above acquisition case, Galaxy Jinhui, a wholly-owned subsidiary of Galaxy Securities, has not yet obtained a public offering license, nor has information shown that it has applied for a public offering license.
"Dongzheng Asset Management got the public offering license as early as 2013, and later many securities dealers' asset management went to get it (the public offering license), but after that, they didn't (like Dongzheng Asset Management) issue so many products. At that time (before the release of the new asset management regulations), life was easy, they were all doing channels, actively managing with difficulty, and did little." A securities dealer in Sichuan told China Business Daily, "But before and after the release of the new asset management regulations, the company took the initiative to manage and return to the original source, in line with the regulatory intent, and more (securities firms) attached importance to public offering licenses and applied for public offering licenses. At present, the speed of approval is not very fast."
The person said that there are many ways for securities companies to obtain public offering licenses. One is for securities companies to participate in holding the equity of public offering fund companies, one is for asset management companies to apply for public offering licenses, and the other is for securities companies to directly apply for public offering licenses. "In the past, many securities companies participated in holding public offerings to gain synergy, such as selling products." As mentioned in these models, considering that it takes some time for asset management or securities companies to apply for licenses, participation in holding public offerings is also a way to quickly obtain licenses.
Galaxy Securities admitted that the purpose of this acquisition of Galaxy Fund is "to enrich and improve the company's asset management business product line".
According to incomplete statistics of public information, the reporter of China Business Daily has now obtained 14 securities companies or asset management subsidiaries of securities companies with the qualification for public fund management. Among them, there are 7 securities companies directly involved in the public fund business, namely Shanxi Securities , Guodu Securities Dongxing Securities Huarong Securities, BOC International Securities, Gaohua Securities and Xiangcai Securities that are rumored to be approved this year; There are also 7 participating companies in the form of asset management subsidiaries of securities companies, namely Huatai Asset Management, Changjiang Asset Management, Dongzheng Asset Management, Caitong Asset Management, Zheshang Asset Management, Bohai Huijin, and Zhongtai Asset Management which was approved last year.
It is worth noting that it takes a relatively long time for securities companies to obtain approval whether they apply for a public offering license or set up a public offering subsidiary. This year, it was also reported that securities companies planned to set up public fund companies and withdrew because the progress was too slow than expected.
For the acquisition of Galaxy Fund, Galaxy Securities has a natural advantage. As of July 18, the largest shareholder of Galaxy Fund is Galaxy Financial Holding, which holds 50% of the equity of Galaxy Fund. This means that after the change of controlling shareholders of Galaxy Fund is approved by the Ministry of Finance and the CSRC, the transaction can be relatively easily controlled by Galaxy Fund.
Consolidate or boost performance
In addition to the above license, other investors asked whether Galaxy Securities would consolidate the statements if the transaction landed and Galaxy Securities held 50% of the equity of Galaxy Fund. In response, an employee of a finance and taxation company in Sichuan told China Business News that "the consolidation scope of the company's consolidated financial statements is determined by whether they are controlled, whether the shareholding ratio is 50% or 51%. If the parent company can control the operation and finance of the subsidiary, it should be considered as a consolidated statement."
This may be good news for investors in the secondary market. Data shows that in 2017, the total assets of Galaxy Fund reached 1.128 billion yuan, and the net assets reached 798 million yuan. By the end of May 2018, its net assets had risen to 837 million yuan. Meanwhile, from January to May 2018, Galaxy Fund realized an operating income of 180 million yuan, a net profit of 39.94 million yuan, and a net profit of 32.87 million yuan after deducting non recurring profits and losses.
On July 27, Galaxy Securities released its 2018 semi annual performance report, which mentioned that "in the first half of 2018, the stock market fluctuated downward, Shanghai composite index Decreased by 14%, Shenzhen Composite Index 15% decrease. The company continues to adhere to steady operation and orderly promote the development of various businesses. From January to June 2018, the company's operating revenue was 4.312 billion yuan, a year-on-year decrease of 23.92%, and the net profit attributable to shareholders of the parent company was 1.326 billion yuan, a year-on-year decrease of 37.22%. ".
By comparing the above data of Galaxy Fund with the performance of Galaxy Securities in the same period, we can see that its annual performance is about 10% of that of Galaxy Securities. "The consolidated statements of Galaxy Fund have a positive contribution to the performance." The relevant parties of Galaxy Securities told China Business News that "from 2015 to 2017, the ROE (return on equity) of Galaxy Fund was more than 20% every year, and the average annual ROE reached 26%."
At the same time, we sorted out the subdivisions of the decline in the annual performance of Galaxy Securities in 2017. Although investment banking and other aspects were impacted by changes in the overall market environment and policy adjustments, the performance of the company's asset management line did increase significantly. According to public data, the revenue of Galaxy Securities asset management business in 2017 was 693 million yuan, up 53% year on year. At the same time, by the end of 2017, the scale of Galaxy Gold's asset management had reached 337.532 billion yuan, a year-on-year increase of 52.4%, and the industry ranking had risen from 24th to 13th. Among them, the scale of collective asset management was 38.128 billion yuan, the scale of targeted asset management was 289.558 billion yuan, the scale of special asset management was 9.847 billion yuan, and the number of managed products was 375.
"In April 2017, Galaxy Securities increased its capital to Galaxy Jinhui by 500 million yuan. In August of the same year, the Board of Directors approved a proposal to increase its capital to Galaxy Jinhui by another 1 billion yuan. At the same time, it increased its net capital guarantee to Galaxy Jinhui by 2 billion yuan." Haitong Securities Sun Ting, an analyst, mentioned that thanks to this, Galaxy Securities "achieved a significant increase in the scale of asset management and income level".
Plus "big asset management"
It can be seen from the above capital increase that the balance of Galaxy Securities' strategy is adding weight to "big asset management". Galaxy Securities mentioned that in 2017, the company's business model was adjusted from "one core and two wings, coordinated development" to "two wheel drive, coordinated development", and one of the "two wheel drive" was the comprehensive wealth management service that gradually developed from the integration of big brokerage and big asset management business, And put forward a clear goal of improving the active management ability of large asset management business in 2018.
In fact, the current channel business still accounts for a large proportion of the asset management scale of securities firms. According to the data (provided by Galaxy Securities), as of the end of 2017, the channel business scale accounted for 68% of the asset management scale of securities firms, and the other 32% was active management. In the 32% of active management, many of the scale is expected income type, and a small part is net worth type. "After the implementation of the new asset management regulations, the proportion of channel business in the total scale will gradually decline, and the ability of active management will be the core ability to test the level of asset management of securities firms." Relevant parties of Galaxy Securities mentioned.
According to the data of Tiantian Fund Network, as of June 30, 2018, the total shares of Galaxy Fund at the end of the reporting period were 60.258 billion, a decrease of 2.59% over the previous period, and the net assets at the end of the reporting period were 68.895 billion yuan, an increase of 14.74% over the previous period. At present, the management scale is 68.956 billion yuan, and there are 99 funds.
"In fact, through mergers and acquisitions, securities companies have realized the development of securities groups, diversified profits and improved their anti cyclical ability. In 2017, subsidiaries of securities companies contributed more than 50% of their income, and some outstanding securities companies have made considerable contributions to the profits of their parent companies." Galaxy Securities related parties mentioned the future synergy between Galaxy Securities and Galaxy Fund.
Editor in charge: Wei Yu
