Two types of small M&A can take a shortcut to review, and the market will recover for some time
Zhang Jingyi
[The actual impact of "small and fast" may be very limited, which is only good for the merger of some small targets; more accurately, the new mechanism is more like a fine-tuning and simplification of the audit process]
A news that the CSRC launched a "small fast" M&A review mechanism was screened on the first trading day night after the long holiday.
"The position of encouraging mergers and acquisitions is clear." In the minds of many market participants, the new mechanism has strengthened their judgment on the policy shift. During the year, the regulatory authorities repeatedly expressed their support for mergers and acquisitions of listed companies, and the review process of mergers and acquisitions continued to accelerate. However, in the view of many investment bankers, due to the strict restrictions on stock ratio and transaction amount, the actual impact of "small and fast" may be very limited, which only benefits the M&A of some small target; More precisely, the new mechanism is more like a fine-tuning and simplification of the audit process.
Implementation of small quick mechanism
On the evening of October 8, the CSRC officially announced the launch of the "small and fast" M&A and restructuring review mechanism to simplify administrative licensing and shorten the review time.
Specifically, when a listed company issues shares to purchase assets, it does not constitute a major asset restructuring, and if one of the two situations is met, it can go through a "small quick" audit. One is that the accumulated transaction amount in the last 12 months does not exceed 500 million yuan; On the other hand, the cumulative issued shares in the last 12 months do not exceed 5% of the total share capital of the listed company before this transaction, and the cumulative transaction amount in the last 12 months does not exceed 1 billion yuan.
Among them, the cumulative transaction amount refers to the transaction amount of purchasing assets by issuing shares, and the cumulative issued shares refer to the shares issued for purchasing assets. In addition, the CSRC also said that if the raised matching funds are used to pay the cash consideration of this transaction or the amount exceeds 50 million yuan, and if they belong to the "prudent review" category in the separation system review, the "small quick" review is not applicable.
According to the provisions of the CSRC, the above two kinds of mergers and acquisitions that go through the "small and fast" review process have been greatly compressed, and can be directly reviewed by the Merger and Reorganization Committee after being accepted by the CSRC. Compared with the current administrative licensing review procedures for mergers and acquisitions, this review channel reduces the link of preliminary review and feedback.
The audit time has been greatly shortened, which has also become one of the highlights of the new mechanism that attract the most market attention.
The head of a financial advisory (FA) organization in Shanghai analyzed to the reporter that, according to the requirements of the new mechanism, the scheme design can be more flexible and the operation space can be larger when acquiring some small targets. "Before this channel, M&A review was slow, and there were many questions and feedback. Going 'small and fast' can save a lot of time and reduce the uncertainty of M&A. For example, you can issue shares to purchase assets by sticking to the standard of no more than 5% of the total capital stock, reduce the pressure of cash M&A, and also realize the long-term binding of interests through issuing shares."
The person also said that although the overall scale of eligible M&As may be small, the launch of the "small fast" audit channel is more obviously intended to encourage industrial integration and upgrading through M&As and eliminate backward production capacity. This may be a sign of policy change.
Encouragement is not comprehensive relaxation
The market is more sensitive to policy trends and changes. In contrast, more investment bankers believe that the position of encouraging mergers and acquisitions behind the new mechanism is clear, but the actual stimulus effect is limited.
"On the whole, it is good for listed companies lacking money to acquire small targets, but the impact on the market as a whole is limited. After all, the two types of standards are very strict. To be precise, the new mechanism is closer to a simplification of the process." said a person from the M&A Financing Department of a large domestic securities firm.
In fact, since this year, the regulatory authorities have repeatedly expressed their support for mergers and acquisitions of listed companies. The review process of mergers and acquisitions has also been accelerating, and the M&A market has been significantly boosted. According to the speech made by the senior management of the CSRC in August in public, as of the end of July, A-share listed companies had implemented 2377 mergers and acquisitions, an increase of 87% year on year, and the transaction amount was 1.36 trillion yuan, an increase of 38% year on year.
In the opinion of investment bankers, the real recovery of the M&A market will take time. In addition to the increase in market demand, asset prices and market funding have a profound impact on the M&A market. "At present, the secondary market is not performing well, listed companies are cash strapped, and the actual controller is under great pressure to deleverage, which suppresses the M&A market. In addition, the regulation encourages M&A but has not been fully relaxed, and arbitrage and speculation are still subject to strict supervision. Under this situation, the M&A market is difficult to really recover and prosper." said the above-mentioned securities trader.
He stressed that the current regulation of significantly canceling and simplifying administrative licensing and constantly promoting reform are to provide a stable regulatory environment and financing facilities for the M&A market, and this trend and position will continue in the future. With the continuous increase of policies, M&A is expected to usher in a real spring in the future with the increase of M&A demand and the recovery of the secondary market.
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Editor in charge: Li Feng
