By love-89.com On the evening of October 9, two major Chinese securities firms, Guotai Junan Securities and Haitong Securities, announced their merger and reorganization plan, with the market perceiving Guotai Junan as the driving force behind the union. Following the announcement, both companies resumed trading ahead of schedule on October 10. Shanghai First Financial noted that the merger would create a “super carrier” for China’s securities industry.
According to Caixin, the reorganization details made public on the evening of the 9th clarified that the share exchange ratio for both A-shares and H-shares will be 1:0.62, meaning each share of Haitong Securities will be convertible into 0.62 shares of Guotai Junan. The specific pricing, based on the average trading price over the 60 trading days leading up to the pricing base date, sets Guotai Junan’s A-share conversion price at 13.83 RMB (approximately $2) and the H-share conversion price at 7.73 HKD (around $1). Corresponding prices for Haitong’s shares will be 8.57 RMB and 4.79 HKD, respectively.
In the first half of 2024, Haitong Securities reported revenues of 8.865 billion RMB (about $1.25 billion), reflecting a year-on-year decline of 47.76%, while net profit plummeted by 75.11% to 953 million RMB. After the merger, Haitong will cease trading and cancel its corporate legal status. Although the merger is viewed as being spearheaded by Guotai Junan, sources close to the firm emphasize that the transaction is based on principles of strong partnership and equal merger.
As of the end of June 2024, post-merger, the total assets, net assets, and net capital for the combined firms are estimated to be around 1.62 trillion RMB (approximately $229 billion), 331.1 billion RMB, and 177.2 billion RMB respectively, placing them at the forefront of the industry. This balance sheet expansion is expected to significantly bolster the merged company’s risk-bearing capacity, enhance its capital utilization space, and improve capital efficiency.
In terms of retail operations, the merger is projected to yield a more robust client base and comprehensive network. Data from close associates of Guotai Junan indicate that the combined retail client count will reach approximately 35.93 million, with net income from seat rentals hitting 1.6 billion RMB (about $230 million), and the number of A-share IPO sponsorships reaching 44, all leading the industry. The merger will also consolidate their presence in key regions such as the Yangtze River Delta, Beijing-Tianjin-Hebei, and the Pearl River Delta, with a total of 343 branches, making them the industry leader in this regard.
According to Dongfang Caijing, both Guotai Junan and Haitong Securities are state-owned enterprises based in Shanghai. This merger is viewed as a strategic move to synergize Shanghai’s financial resources and establish a first-class investment bank that aligns with Shanghai’s status as an international financial center, thereby enhancing the competitiveness and influence of this financial hub.