Orient Securities announced that it will acquire unlisted rival Shanghai Securities, in a deal that local media said would make it one of China’s 10 biggest brokerages.
The deal comes as China’s central government, eager to build globally competitive investment banks and asset managers, encourages consolidation in the country’s $1.7 trillion brokerage industry.
Orient Securities said on Sunday that it would use cash and newly issued shares to acquire 100% of Shanghai Securities but did not give a value for the deal.
Both Shanghai-based firms are controlled by companies that manage state assets for the Shanghai government.
Total assets of the combined entity are expected to exceed 600 billion yuan ($88 billion), making Orient Securities a top 10 brokerage in China, Shanghai Securities News reported.
Orient Securities’ Hong Kong shares jumped as much as 13.5% before paring most of those gains to be up just 0.8% in morning trade.
Beijing has dialled up rhetoric about the need for reform in the brokerage sector, with new directives to encourage mergers and acquisitions as well as restructuring in an industry in which more than 140 Chinese and foreign players compete.
Shanghai-based brokerage Guotai Junan acquired Haitong Securities last year, creating Guotai Haitong, China’s largest brokerage by assets at the time before it was later outranked by Citic Securities.
Reuters
