Refinancing New Rules To Open Up The Extension Of Mergers And Acquisitions Imagination Space Agency To Search For Fixed Increase "Arbitrage Space"

What excuses the organization is the "arbitrage" of the new regulation. In the period of mergers and acquisitions and refinancing easing, the small and medium sized stock market, especially gem's EPC acquisition, is beginning to be mentioned again. In the beginning of 2020, the new first and half market cycles will be opened.

The impact of the epidemic has not yet been completely lifted, but it does not hinder the continuous deepening of the deepening reform of the capital market. Just last Friday (February 14th), the SFC issued the Valentine's day policy package to the market, and the new regulation of refinancing issued in November 2019 was finally landed.

This week is the first week of the new regulation of refinancing, and every corner of the market has obviously become restless. Whether it is a Securities researcher, a private equity institution and a bank employee, everyone has been pulling the list from the weekend, looking for the target, building group and saving bureau. Compared with the strict supervision period of the capital market in the past few years, everyone feels that the spring breeze of the policy has brought the "spring" of the capital market.

At the same time, along with the recent gem index stands high, small cap stocks have been a long time without market concern. Under the relaxed cycle of mergers and acquisitions and refinancing, small and medium cap stocks, especially gem's EPC acquisition, are beginning to be mentioned again. In the beginning of 2020, the new one and half market cycles will be opened.

Finance Bureau enthusiastically renewed

"We have a few LP groups, usually quiet except for routine maintenance, but on the night of the new regulation of refinancing, the group began to bustle. Many investors asked whether our funds should be increased arbitrage. If there are good targets, LP can be introduced here." Beijing, a medium-sized private equity investment director told reporters, has not seen for a long time we care about the increase of products.

Reporters also learned that the new regulations directly ignited the enthusiasm of the market after landing, although the various kinds of business of the epidemic are still gradually resumed under the line, but online has been in full swing.

"The new regulation of refinancing has made us realize what we must do this year. We have arranged the detailed data for our colleagues at the weekend. If there are related enterprises, we will start contacting and docking next Monday." Bao Bao, a senior brokerage firm in Beijing, told reporters. The person also said that the new regulations greatly increased the number of companies that could be financed after the entry into force, which greatly improved the number of potential businesses.

What makes the institution so excited is the "arbitrage" of the new regulation. According to the calculation of the institution, the fixed price increase date will be changed from the first day of issue to the date of resolution of the board of directors, the resolution date of shareholders' meeting or the first day of issue. This means that the fixed price increase can be locked ahead of time, and the base price will be changed from 10 percent off of the average stock price of the 20 trading days before the benchmark price to 20 percent off. Therefore, for the fixed price increase, only considering the contribution rate of the discount rate (generally the base price), the annual income can reach 16.7%, and the high discount investment value is highlighted.

Sun Jinju, assistant director of the open source securities and research institute director, said that the fixed price increase was still the first day of the issue period, but the base price discount was changed from 10 percent off to 20 percent off, and the lockup period was changed from 12 months to 6 months. The attractiveness of the new regulation will increase significantly, but the time needed for capital to enter is still in demand. At present, the fixed market is still oversupply, and the short-term discount rate is high, the locking period is short, and the discount arbitrage is not limited.

Reporters learned that some institutions have already designated the direction of the selection. One of the organizations told reporters: "this new regulation has a larger marginal change to the gem. Before the reorganization of the new regulation, the reorganization of the gem has been released. The new regulation of refinancing has allowed the company that originally did not meet the profit conditions for 2 consecutive years to increase. These companies are expected to have higher demand. Among them, we are optimistic about the loss in 2017, but in 2018, or in 2017, and in 2018. But the technology companies that are expected to make profits in 2019 will further analyze the reasons for the loss in those years, and expect the quality companies to go up after that. Now that the new rules are coming down, there are likely to be some companies that plan to increase their future plans, while the market value will be screened below 20 billion yuan or more than 5 billion yuan.

At the same time, what is more exciting to the market is that the new regulation has dropped the threshold to a million level, that is to say, the threshold of making money has dropped sharply compared with the previous fixed increase.

According to the open source securities statistics, with the increase of 112 bidding cases implemented in 2019 as an example, the average actual fund-raising scale is only 854 million yuan, which is evenly distributed according to 35 distribution objects, with a single amount of only 24 million 400 thousand yuan. Considering that there are still less than 200 million small supporting financing projects, the threshold for fixed increase will drop to millions.

"The sharp drop in the threshold is not only a sign of a sharp decline in the demand for the market, but also means that more investors can participate in the fixed market investment. We anticipate that individual investors, private investors, public offering investors, insurance institutions, enterprise annuity and social security will participate in the future, and the funds and subjects will be more diversified. "Fixed increase will become an important investment means for equity investment." Sun Jinju said.

The acquisition of epitaxy is mentioned again.

The effect of refinancing deregulation is not only the rate of increase in arbitrage, but refinancing has always been in the same regulatory cycle as the revaluation of mergers and acquisitions, and this round is the same. In October 2018, the revaluation of mergers and acquisitions began to become loose, and now the formal completion of refinancing is loosening, which means that a big cycle is coming. Therefore, with the advent of the new rules, the market has also called for the extension of mergers and acquisitions.

Chen Guo, chief strategist of Anxin securities, believes that fixed growth is a powerful weapon for enterprises to develop from "small and beautiful" to "big and strong". Fixed increase financing can promote the endogenous expansion of enterprises, and increasing mergers and acquisitions is also an important way for enterprises to grow. Through vertical mergers and acquisitions, listed companies can control a large number of key raw materials and sales channels, effectively control the activities of competitors, improve the entry barriers of enterprises and the differentiation advantages of enterprises. Through horizontal mergers and acquisitions, listed companies can increase market share, form economies of scale, and become leaders in the market.

Guoxin Securities analyst Zeng Guang also said: "the new regulation of refinancing will help listed companies to rely on financial support to better integrate their development. Therefore, the main good sectors have small and medium-sized leading companies that epitaxy merger and expansion logic. Specifically, the industry concentration degree is relatively low, there is a good integration and extension space for mergers and acquisitions, and the leading companies themselves are more prominent in their operating ability.

However, there are also securities dealers who believe that the new regulation of refinancing is beneficial to the growth of small and medium sized stocks through rational mergers and acquisitions. However, since the market suffered the pain of sustained goodwill after 2014-2015 years of speculation, the market will no longer return to the trend of continuous speculation of junk stocks.

However, the impact of the new regulation of refinancing on the two tier market is obvious.

The private sector in Beijing said: "refinancing and the relaxation of mergers and acquisitions is one of the core driving forces of growth style. Specifically, from 2014 to 2015, the growth style significantly outperformed the blue chip style in the relaxation period of mergers and acquisitions. From 2016 to 2018, the blue chip style was significantly ahead of the growth style in the tightening period of mergers and acquisitions. The reason is that the growth stocks represented by technological innovation can benefit more from the relaxation of mergers and acquisitions, and then the excess returns on stock performance are significant.

(Editor: Wu Yan Ling)

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