"M&A" is becoming a hot word in the securities industry. Since May, new progress has been made in M&A and restructuring cases of many securities companies, including "Guolian+Minsheng", "Zheshang+Guodu", etc. At the same time, equity changes in securities industries such as Changjiang Securities, Dongguan Securities and Northeast Securities are increasingly frequent. Industry insiders said that under the guidance of policies, securities companies' mergers and acquisitions integration or speed up, thus driving the improvement of industry concentration.
Several M&A cases of securities industry welcome new progress
On May 14, Guolian Securities announced that it planned to purchase 100% shares of Minsheng Securities held by 46 counterparties, such as Guolian Group and Fengquanyu, at a price of 11.31 yuan per share by issuing A shares, and raise matching funds of no more than 2 billion yuan from no more than 35 specific investors to develop Minsheng Securities business. On May 15, the trading limit of Guolian Securities was increased after the resumption of trading.
On April 25 earlier, Guolian Securities said that it planned to acquire 95.48% shares of Minsheng Securities held by 45 counterparties by issuing A-shares. On May 14, Guolian Securities announced that the proportion of shares of Minsheng Securities to be acquired would be increased to 100%.
"Minsheng Securities and Guolian Securities have complementary advantages in terms of location." According to the analysis of AVIC Securities Research News, Guolian Securities currently focuses its business in Jiangsu Province, with 56 of the company's 86 business departments in Jiangsu Province. Minsheng Securities is a national comprehensive securities firm with a wide range of brokerage branches in nearly 30 provinces (including municipalities directly under the Central Government and autonomous regions). After integration, Guolian Securities is expected to further expand its brokerage business layout. In addition, the investment banking business and research business strength of Minsheng Securities rank the forefront of the industry. In 2023, the commission income of Minsheng Securities' sub warehouse ranks 17th in the industry, and Guolian Securities ranks 38th. After integration, it is expected to rise to around 12. Minsheng Securities has focused on research business since 2021, and the compound annual growth rate of the sub warehouse commission income has reached 153.40% since 2 years.
Another progress case comes from Zheshang Securities and Guodu Securities. On May 10, Zheshang Securities announced that the company planned to participate in the bidding of the underlying shares held by the same venture capital and Jiarong Investment. According to the property right transfer information publicly disclosed by Beijing Equity Exchange, Tongfang Venture Capital and Jiarong Investment publicly listed and transferred 346 million shares of Guodu Securities (corresponding to 5.95% of Guodu Securities) and 85.3627 million shares of Guodu Securities (corresponding to 1.46% of Guodu Securities) respectively, with the transfer base price of 911 million yuan and 224 million yuan respectively.
On the previous March 29, Zheshang Securities transferred the equity of Guodu Securities from five companies, becoming its largest shareholder. Zhejiang Merchants Securities announced that it plans to transfer 4.7170%, 4.7170%, 3.7736%, 3.3089% and 2.6289% shares of Guodu Securities held by Chongqing Trust, Tianjin Zhongxin, Chongqing Jiahong, Shenzhen Yuanwei and Shenzhen Zhongjun respectively by means of agreement, with a total of 19.1454% shares. After the successful transfer, Zheshang Securities will become the largest shareholder of Guodu Securities.
The mergers and acquisitions of Ping An Securities, Founder Securities, Huachuang Securities and Pacific Securities are also being promoted. Huachuang Yunxin said that in January 2024, after being reviewed and approved by the company's shareholders' meeting, Huachuang Securities will go to the court to get the enforcement ruling and handle the equity transfer procedures after the CSRC approves the shareholder qualification. And how Founder Securities and Ping An Securities, which are controlled by Ping An of China, will adjust their organizational structure and avoid horizontal competition in the future has also attracted market attention.
Increasingly frequent changes in industry equity
At the same time, the increasingly frequent equity change events in the securities industry further strengthened the industry integration expectations. On May 14, Changjiang Securities announced the progress of equity transfer. The State owned Assets Supervision and Administration Commission of the State Council recently issued the Reply on Matters Related to the Non public Agreement Transfer of Shares Held by the State owned Shareholders of Changjiang Securities Co., Ltd., agreeing that Hubei Energy and Three Gorges Capital will transfer their 529.61 million shares and 332.93 million shares of Changjiang Securities to the Yangtze River Industrial Group in the form of non public agreement; After the completion of share transfer, the total share capital of Changjiang Securities will remain unchanged, of which Hubei Energy and Three Gorges Capital will no longer hold shares of Changjiang Securities.
It is worth noting that after the transfer is approved by relevant departments and the share transfer is completed, the state-owned assets of Hubei Province will become the largest shareholder of Changjiang Securities. At the same time, Changjiang Industrial Group and the existing shareholders of Changjiang Securities Wuhan Urban Construction Group Co., Ltd., Hubei Hongtai Group Co., Ltd., Hubei Tourism Investment Venture Capital Co., Ltd., Hubei Small and Medium sized Enterprise Financial Service Center Co., Ltd., and Hubei Daily Media Group signed the Agreement of Concerted Action respectively. The state-owned assets of Hubei Province will directly and indirectly hold 28.22% shares of Changjiang Securities.
The receiving party of 20% equity transfer of Dongguan Securities has also appeared. At the end of March this year, Jinlong Shares announced that recently, the company and Dongguan Financial Holding Capital Investment Co., Ltd. reached a preliminary intention on the latter's intention to acquire 300 million shares of Dongguan Securities held by the company (accounting for 20% of the total capital stock of Dongguan Securities, hereinafter referred to as "the target shares"), and signed a non binding transaction memorandum. Thereafter, both parties will continue to carry out negotiations and negotiations on matters related to the transaction of the underlying shares.
Northeast Securities will also change ownership of nearly 30% of its shares. At the end of March this year, Yatai Group also announced that it planned to sell 29.81% shares of Northeast Securities. Among them, Yatai Group plans to sell 20.81% shares of Northeast Securities to Changchun Urban Development Investment Holding (Group) Co., Ltd. and 9% shares to Changchun Financial Holding Group Co., Ltd. or its designated subsidiaries.
Merger and integration of securities companies will speed up
In fact, recently, the regulatory level has repeatedly mentioned and encouraged securities companies to become better and stronger and enhance their core competitiveness through mergers and acquisitions, and the market expectation of securities industry mergers and acquisitions is also rising. In November 2023, the CSRC proposed that it would support the head securities companies to become better and stronger through business innovation, group operation, mergers and acquisitions, and other ways to build a first-class investment bank, play an important role in serving the main force of the real economy and maintaining financial stability.
In March this year, the CSRC issued 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), which proposed to moderately expand the capital space of high-quality institutions and support the head institutions to become better and stronger through mergers and acquisitions, restructuring, organizational innovation and other ways; We will encourage small and medium-sized institutions to develop differently and operate with their own characteristics. We will make more efforts to improve their resource endowments and professional capabilities in combination with the characteristics of shareholders, regional advantages, talent reserves and other resources. In April, the new "National Ninth Article" mentioned that it is necessary to support the head institutions to improve their core competitiveness through mergers and acquisitions, restructuring, organizational innovation and other ways, and encourage small and medium-sized institutions to develop differently and operate with characteristics.
Industry insiders said that under the guidance of policies, securities companies' mergers and acquisitions integration or speed up, thus driving the improvement of industry concentration. "It is an option for small and medium-sized securities firms to achieve curve overtaking through mergers and acquisitions to complement business weaknesses and achieve cross regional operation." Luo Qianhui, chief analyst of Shenwan Hongyuan Nonbank, said that the current internal and external environment for mergers and acquisitions in the securities industry has basically been established. Under the dual role of endogenous driving and policy guidance, securities firms' mergers and acquisitions integration may speed up. It is expected that M&A and restructuring of securities companies will include four directions, namely, solving horizontal competition, regional characteristic securities companies' demands for becoming bigger and stronger, state-owned assets integration of private securities companies, and integration of securities companies under the same actual controller.
AVIC Securities said that the current policy continues to guide "building a first-class investment bank and investment institution". The industry rate has declined and competition has intensified. Some securities companies are expected to improve market share and comprehensive strength through mergers and acquisitions. Under the dual role of endogenous drive and policy orientation, M&A integration of securities firms may speed up.
Hualong Securities said that M&A and restructuring of the securities industry will still be the main line of investment in 2024. The leading securities companies will become better and stronger through M&A and restructuring, organizational innovation and other ways. The industrial characteristics of differentiated development and featured operation of small and medium-sized securities companies have been further verified. The M&A and restructuring of the securities sector will continue to ferment, and the industry will continue to be catalyzed by M&A and restructuring events.
