When Ping An And Founder Merge, Are New Aircraft Carrier Securities Companies Rising?

The integration of securities companies is in the ascendant.

On July 5, Founder Securities (601901) announced that the company's controlling shareholder will be changed to the new Founder Group indirectly controlled by Ping An of China.

After the change, Ping An of China will control two securities companies, namely Ping An Securities and Founder Securities. Therefore, the merger of the two securities companies has become the focus of market attention.

A person close to Ping An said: "after the merger of the two companies, their ranking in credit business, brokerage, investment banking and other businesses will be greatly improved, and they will break into the area of head securities dealers. For example, in terms of research business, Ping An Securities focuses on industrial research and is good at serving the group's institutions, high net worth and financial market customers, while Founder Securities Fund Commission sub warehouse industry is ahead. The combination of the two is complementary to each other. "

As a matter of fact, the regulatory authorities have already proposed the hope of building an aircraft carrier level securities company in China. Then, does the merger of Ping An Securities and Founder Securities mean that a new aircraft carrier securities firm will rise?

Founder securities changes ownership

On July 5, founder securities issued a suggestive announcement on the restructuring progress of controlling shareholders and the proposed changes of controlling shareholders and actual controllers.

According to the ruling of Beijing No.1 Intermediate People's court and the effective restructuring plan, all shares held by Founder group, the controlling shareholder of Founder Securities, and its acting party, founder property control, will be transferred to the new Founder group to be established, and the controlling shareholder of the company is to be changed from Founder group to new Founder group.

Previously, due to the serious debt problem, Founder group was ordered to restructure by the first central court of Beijing in February 2020 and entered the reorganization process.

On April 30 this year, all parties involved in the restructuring signed the restructuring investment agreement and submitted a draft restructuring plan to Beijing No.1 Intermediate People's court.

According to the announcement on the restructuring progress of the participating Founder group issued by Ping An of China, Ping An Life Insurance signed a restructuring investment agreement with Founder group and all parties involved in the restructuring. Ping An Life of China authorized Ping An Life to acquire 51.1% - 70% of the shares of new Founder Group for a consideration of 37.05-50.75 billion yuan. After the restructuring, Ping An of China will hold the new Founder group.

As of the disclosure date of this announcement, Founder group held 2.285 billion shares of Founder Securities, accounting for 27.75% of the total share capital of the company; Founder group acting in concert, founder property holding 79 million shares of the company, accounting for 0.96% of the company's total share capital. The two sides hold 2.363 billion shares of the company, accounting for 28.71% of the total share capital of the company.

According to the restructuring plan, Ping An Life or its wholly-owned subsidiaries intend to transfer 73% - 100% of the equity of new Founder group according to the proportion of 70%.

Therefore, Ping An Life or its subordinate wholly-owned entities intend to become the controlling shareholder of new Founder group. As the controlling shareholder of Ping An Life, Ping An of China will also indirectly control the company by virtue of 2.363 billion shares of Founder Securities held by new Founder group.

Regarding the effectiveness of the reorganization plan of the parent company, Founder Securities said that the equity change accounted for 28.71% of the total share capital of the company, which was intended to change the controlling shareholder of the company from Founder group to new Founder group. According to the publicly disclosed annual report of China Ping An insurance (group) Co., Ltd. in 2020, Ping An, which indirectly controls the company, has no controlling shareholder or actual controller, The actual controller of the company is proposed to be changed from Peking University to no actual controller.

Brokerage and credit business has been greatly improved

Based on the relevant provisions of "one participation and one control", industry insiders believe that the merger of Founder Securities and Ping An Securities is only a matter of time.

According to the data of China Securities Association, by the end of 2020, the total assets and net assets of Ping An Securities were 187.992 billion yuan and 32.812 billion yuan respectively, ranking 14th and 17th in the industry.

The total assets and net assets of Founder Securities reached 104.925 billion yuan and 38.715 billion yuan respectively, ranking 19th and 15th in the industry.

After the merger, both the scale of total assets and the scale of net assets are expected to become the top ten securities companies in China.

Especially in the brokerage business, by the end of 2020, Founder Securities brokerage business income was 3.676 billion yuan, ranking 12th in the industry, Ping An Securities brokerage business income was 3.66 billion yuan, ranking 13th in the industry.

After the merger, the brokerage business income reached 7.336 billion yuan, ranking third, surpassing China Merchants Securities, only lagging behind CITIC Securities and Guotai Junan.

It is reported that Ping An Securities has 80 business departments and branches, mainly distributed in Guangdong, Fujian, Jiangsu, Zhejiang, Shanghai and other regions. It is worth mentioning that due to the impact of the epidemic last year, Ping An Securities made full use of its online capabilities to provide services to customers, and the average daily online customer volume of the whole year increased by 64.8% year-on-year.

In contrast, Founder Securities through the acquisition of national securities, the number of business departments increased significantly, in the business outlets and long-term customer source advantage.

As of the end of last year, founder securities business network includes 347 business departments, 25 branches, 6 domestic and foreign holding subsidiaries and 1 participating subsidiary, with the number of securities business departments ranking second in the industry. More than half of the sales offices are located in Hunan, Zhejiang and Guangdong.

Not only that, the merger also has a greater contribution to investment banking and credit business.

In terms of credit business, in 2020, there are three securities companies with interest income of more than 5 billion yuan and 13 securities companies with more than 2 billion yuan. Among them, CITIC Securities ranked first in the industry with 6.544 billion yuan; Huatai Securities and Guotai Junan ranked second and third with 5.961 billion yuan and 5.838 billion yuan respectively.

After the merger, the interest income of margin trading business reached 3.585 billion yuan, ranking eighth, surpassing Haitong Securities; Investment banking business, the overall business income reached 2.078 billion yuan, also ranked eighth, surpassing Everbright Securities.

The rise of new aircraft carrier securities companies

In recent years, with the rapid opening up of the financial market, the regulatory authorities have encouraged domestic securities companies to become bigger and stronger, merge and restructure, and create aircraft carrier level securities companies.

As a result, large and medium-sized securities companies competed to join the army of mergers and acquisitions, opening a new round of shuffling and integration of the securities industry.

Last year, there were many rumors of securities companies merging in the market, including CITIC Securities and CITIC construction investment, first venture and capital securities, Guojin securities and Guolian securities.

The first two cases were refuted by the government, and the last one was that both parties failed to reach an agreement on some core terms of the merger plan and terminated the merger.

Although the three merger rumors all ended in failure, in the future domestic market, under the background of building an aircraft carrier level securities company with international competitiveness, the merger and reorganization of securities companies is still the general trend.

Previously, in an interview with the 21st century economic report, Sheng Xitai, a senior investment banker and chairman of Beijing Hongtai group, said that the securities industry needs a group of real leading and competitive securities companies.

He believes that the main reason why domestic securities companies are not respected is that they are too small. At present, the largest securities company is not as good as a second and third rate commercial bank. Small securities companies do not need to exist. Financial institutions are enterprises with operational risks. Since the operation risk is large enough, there is a chance to breathe if there is a problem. There is room to move. The volume is too small to do so.

A securities source in South China said that the fastest way for domestic aircraft carrier level securities companies is to merge large securities companies with large securities companies, which is equivalent to the combination of strong and powerful companies, such as CITIC Securities and CITIC construction investment securities; Secondly, big securities companies merged with small ones, and strong and weak ones merged. In the past, CITIC Securities reorganized Guangzhou securities. As for the combination of small and medium-sized securities companies, they can only move closer to the head“ From the current point of view, Ping An Securities and Founder Securities merger, is expected to enter the head of the securities business area. "

There may be a new shareholder

It is worth mentioning that the company's 1.090 billion shares held by Beijing Zhengquan Holding Co., Ltd. (hereinafter referred to as Zhengquan Holdings), the second largest shareholder of Founder Securities, announced the auction.

Ping An of China and Cinda of China, which are speculated to be involved in the auction and take over some shares, have not appeared at the auction.

As of June 21, Zhengquan holdings held about 1.799 billion shares of the company, accounting for 21.86% of the company's total share capital, according to the Founder Securities announcement. Among them, 710 million shares of the company (accounting for 8.62% of the total share capital of the company) were ruled by the Dalian Municipal Intermediate People's court to compensate for the civil creditor's rights of 6.091 billion yuan enjoyed by Guotong trust for Zhengquan holding. According to the trust contract, state Telecom trust distributed 710 million shares of the company to China Xinda, the beneficiary of the trust.

The 1.09 billion shares of the company in the judicial auction are all the remaining shares held by Zhengquan holding, accounting for 13.24% of the total share capital of the company, which has been frozen by the judiciary.

According to the provisions of the Supreme Court on the auction and sale of property in the civil execution of the people's court, when the equity of a listed company belongs to movable property, it shall not be lower than 80% of the assessed price or market price at the first auction; The second auction shall be held within 60 days after the current auction, and the reserve price may be reduced at the discretion of the auction, but the amount of reduction each time shall not exceed 20% of the previous reserve price.

And where this part of the shares will go has also attracted the attention of the industry.

However, no matter who took the shares in the final auction, the change of ownership of the first shareholder and the debt repayment and punishment of the second shareholder made the equity structure of Founder Securities face a major reshuffle. Some securities dealers believe that more powerful shareholders will increase the space for business development.

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