Guolian Securities plans Sinolink Securities stake buy, followed by a merger plan

21 Sep, 2020 15:54
source: Singularity Financial

Singularity Financial Hong Kong September 21, 2020 – Guolian Securities Co. Ltd., a small Chinese brokerage that only listed in Shanghai in July, is planning to purchase roughly 7.82% of and subsequently merge with Sinolink Securities Co. Ltd.

Photo source: Yicai, China’s Guolian Securities to Merge With Sinolink in a ‘Snake Versus Elephant’ Deal

State-owned Guolian, which is ultimately owned by the Wuxi government, will acquire the targeted stake from Changsha Yongjin (Group) Co. Ltd., while the merger will be enacted through a share-swap transaction, in which Guolian Securities will issue A shares to all Sinolink Securities shareholders. No pricing details were given.

Shanghai and Hong Kong-listed Guolian Securities Co. Ltd. and Shanghai-listed Sinolink Securities Co. Ltd. announced the proposed tie-up in separate statements (link in Chinese) on Sunday.

This is the first publicly announced deal in an expected wave of consolidation as the industry gears up to compete with international investment banks such as Goldman Sachs Group Inc. and UBS AG after the government opened up the market to foreign companies.

The deal, which needs regulatory approval, will propel the merged company into the list of the top 10 brokerages in China. Guolian is currently 55th in a ranking of 98 brokerages tracked (link in Chinese) by the government-backed Securities Association of China (SAC), with assets of 27.3 billion yuan ($4 billion), while Sinolink is 33rd with 46.9 billion yuan.

Because of the uncertainties involved in the potential transactions, Guolian Securities suspended the trading of its A-shares on the Shanghai Stock Exchange from Sept. 21, according to a same-date filing.