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On April 25, the total assets of Huatai Securities According to the announcement, Huatai Securities is expected to receive about $1.793 billion (equivalent to about 12.993 billion yuan) in cash from the overall sale of all equities held in the all inclusive asset management platform AssetMark to the funds under GTCR, a private equity investment management company, at a consideration of $35.25 per share.
Since the acquisition was completed in 2016, Huatai Securities has invested in AssetMark for more than 7 years. The income from this transaction in 2024 (before tax in the consolidated statements) is estimated to be about $7957.3 million. If annual shareholders' equity is included, the income will be more generous. In only the last three reporting periods, AssetMark has contributed a total of 1.25 billion yuan to shareholders' profits and losses of Huatai Securities.
Assets sold at a price of US $1.793 billion
AssetMark is a turnkey asset management platform (TAMP) that provides one-stop wealth management services and technical solutions for independent investment advisers and their clients. In 2016, after Huatai Securities completed its acquisition of AssetMark, AssetMark was listed on the New York Stock Exchange in July 2019. At present, the asset under management is about 117 billion dollars.
Huatai Securities holds about 68.4% of the issued common shares of AssetMark through Huatai International Investment. After the completion of the transaction, AssetMark will be delisted from NYSE, and the final completion of the transaction must be approved by the relevant regulatory authorities and meet other delivery conditions.
The announcement shows that Huatai Securities will obtain about US $1.793 billion in cash after the acquisition is completed. According to the currently available financial data, the income of Huatai Securities from this transaction in 2024 (before tax in the consolidated statements) is estimated to be about $7957.3 million (equivalent to about RMB 5.766 billion) [It is assumed that this transaction will be completed by the end of 2024 and subject to the financial condition of AssetMark at the time of completion of the transaction and any other costs, expenses, taxes and deductible items related to this transaction (if applicable)].
That is to say, if the asset sale plan is successfully completed, it will greatly increase the performance of Huatai Securities in 2024. Huatai Securities mentioned that the capital from the sale of this asset will be used to supplement the company's working capital and other general corporate purposes.
Holding shares for more than 7 years, AssetMark develops steadily
According to previous announcements of Huatai Securities, the company acquired 98.952% of the equity of AssetMark Financial Holdings, Inc. in 2016, and the final transaction consideration paid was $768 million. On the delivery date, October 31, 2016, AssetMark became a subsidiary indirectly controlled by Huatai Securities.
After being acquired by Huatai Securities, the performance and asset management scale of AssetMark have been continuously improved, which can bring a certain amount of shareholders' equity to Huatai Securities every year.
According to the acquisition announcement disclosed by Huatai Securities in 2016, the unaudited financial information shows that the operating profit before tax (net adjusted profit excluding net interest expense, tax, depreciation and amortization) of AssetMark for the two years ended December 31, 2015 was US $28.54 million and US $39.792 million respectively. As of March 31, 2016, the total assets on the AssetMark platform were about $28.5 billion.
By 2023, the total asset size of the AssetMark platform has reached US $108.928 billion, an increase of 19.09% over the end of 2022. The annual report also shows that the AssetMark platform serves a total of 9323 independent investment advisers, including 3123 active investment advisers who manage assets of more than $5 million, an increase of 8.36% over the end of 2022; The total number of terminal accounts served by the AssetMark platform covered more than 254000 families, an increase of 5.42% over the end of 2022. During the reporting period, 666 new investment advisers signed cooperation agreements with AssetMark.
The annual report also shows that the market share of AssetMark in the American TAMP industry is 10.8%, ranking second. This is one place higher than the ranking at the time of acquisition.
Obviously, the rapid development of AssetMark has greatly enhanced the performance of Huatai Securities. Huatai Securities will achieve a total revenue of 36.578 billion yuan in 2023, an increase of 14.19% year on year. Among them, the international business income was 7.926 billion yuan, up 19.49% year on year. Huatai Securities said that it was mainly due to the increase in business income of AssetMark and Huatai Financial Holding (Hong Kong).
The annual report shows that in 2023, the operating revenue of AssetMark will be 3.791 billion yuan, with a year-on-year growth of 23.59%; The net profit attributable to the parent company was 863 million yuan, up 27.26% year on year. The shareholder profit and loss attributable to Huatai Securities is about 592 million yuan.
AssetMark has been positive for several consecutive years, for example, the shareholder profit and loss attributable to Huatai Securities in 2022 is about 449 million yuan; In 2021, the shareholders' equity attributable to Huatai Securities is about 214 million yuan. That is to say, in the past three reporting periods, AssetMark has contributed a total of 1.25 billion yuan of shareholder gains and losses to Huatai Securities.
Certain achievements have been made in the process of internationalization
Huatai Securities sold AssetMark suddenly. In the 2023 annual report, Huatai Securities also looked forward to the development of AssetMark. It is mentioned in the annual report that AssetMark will continue to rely on its core business advantages, optimize the integrated technical platform, improve customized and large-scale services, strengthen advanced investment management capabilities, and build a flexible and professional wealth management ecosystem.
As for the reason for the sale of all the shares of AssetMark, Huatai Securities said that the sale comprehensively considered the current competitive pattern of the turnkey asset management platform industry and the need for further development of the company's international business: on the one hand, it is conducive to achieving a higher return on investment and maximizing the interests of the company and shareholders; On the other hand, it is conducive to the company's further optimization of asset and resource allocation.
Huatai Securities also said that it had reached the strategic goal set when acquiring AssetMark. According to previous announcements, Huatai Securities' acquisition of AssetMark has two main purposes: first, to expand the ability of investment management services, and second, to establish the potential of world-class technical solutions. The latter provides Huatai Securities and AssetMark with the opportunity to share best practices, increase investment and expand existing capabilities, and establish an enhanced technology solution platform for the company's customers.
It is understood that Huatai Securities has made certain achievements in the process of internationalization in recent years. In 2019, Huatai Securities issued its first GDR under the Shanghai Luntong mechanism, becoming the first Chinese financial enterprise to be listed in Shanghai, Hong Kong and London, with multiple locations.
Huatai Securities mainly carries out international business through its subsidiary Huatai International. In 2023, the number of IPO sponsors of Huatai International will rank first among Chinese securities firms in Hong Kong, the number of GDR projects will always rank first in the market, and the fixed income, currency and bulk commodity businesses will also rank first in the market. Data shows that the compound annual growth rate of Huatai International's total assets has reached 8.8% in the past three years, and by the end of 2023, its total assets have exceeded HK $200 billion.
According to the announcement on the evening of March 28 this year, Huatai Securities had total assets of 905.508 billion yuan by the end of 2023.
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