China creates $230 billion brokerage powerhouse as consolidation accelerates By Reuters
(Corrects the name of the 2nd tier company to Guotai Junan, not Guotai Juan)
HONG KONG (Reuters) – The merger of two state-backed enterprises in China to create an industry leader with $230 billion in assets is part of Beijing's drive to consolidate the $1.7 trillion industry amid challenging markets, and the move will grow quickly. , say analysts.
Shanghai-based Guotai Junan Securities will buy rival Haitong Securities in an exchange, the two companies said on Thursday. The deal is subject to regulatory and shareholder approval.
The combined entity, worth 1.6 billion yuan ($225.6 billion) in total, will replace Ctic Securities as China's largest private equity firm.
Consolidation of China's consumer goods industry is expected to accelerate, with a focus on state-backed companies within the same system, Huatai Securities said in a research note.
Beijing has applauded talk of the need for reform in the retail sector, with new guidelines to encourage mergers and acquisitions and restructuring in an industry where more than 140 Chinese and foreign players compete.
China's securities regulator said in March it aims to develop about 10 leading institutions in five years, with two to three international investment banks and institutions by 2035.
So far there have been merger and acquisition announcements between six pairs of small brokerages, including Ping An Securities and Founder Securities.
The latest announcement comes three months after Shanghai Communist Party Secretary Chen Jining urged Guotai Junan to “move into a globally competitive and powerful investment bank” during a visit to the company.
($1 = 7.0921 )
