Hongyuan rises after merger approved
Print Edition
HONGYUAN Securities received regulatory approval for a restructuring plan to create China’s third-largest brokerage, sending its shares higher yesterday.
The state-owned brokerage said in a filing to the Shenzhen Stock Exchange that the China Securities Regulatory Commission has approved its merger with its larger rival Shenyin & Wanguo Securities.
Hongyuan’s shares jumped 5.7 percent to 14.92 yuan (US$2.44) following resumption of trading after a suspension on October 30. The share price has soared 82 percent since Hongyuan announced the plan at the end of July.
The plan will see Shenyin & Wanguo buying out Hongyuan in a deal worth 39.6 billion yuan, the largest in China’s brokerage sector. The deal is set to create China’s third-largest brokerage after CITIC Securities and Haitong Securities.
Shenyin & Wanguo ranked 10th in net profits among Chinese brokerages last year and Hongyuan was 12th, data from the Securities Association of China showed.
The deal was the latest move by Central Huijin Investment Ltd, parent of both Hongyuan and Shenyin & Wanguo, to fortify its brokerage business.
Local media reported earlier that Central Huijin was planning to merge Hong Kong-listed China Galaxy Securities with China Investment Securities.
Central Huijin is the investment arm of China’s sovereign wealth fund and holds stakes in nine securities firms.
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