Guosen Securities Leads Industry Consolidation with Vanho Securities Acquisition

Obeying China's Call: Guosen's Strategic Move

Guosen Securities plans to buy control of a smaller rival, Vanho Securities, located in China's tech hub of Shenzhen. Responding to the government's directive to consolidate the nation's brokerage industry, worth 12 trillion yuan (US$1.68 trillion), Guosen signed an agreement on Wednesday to acquire a 53% stake in Vanho.

Mergers and Acquisitions in Focus

The takeover is encouraged by Shenzhen's regulators overseeing state-owned assets, aiming to amalgamate 145 brokerages, which harbor 11.8 trillion yuan in assets, into fewer, larger entities capable of competing globally. Guosen's acquisition echoes a broader trend within the industry.

• Zheshang Securities is also awaiting approval to take over Guodu Securities.
• Guolian Securities announced plans to spend 29 billion yuan to acquire Minsheng Securities.
• Western Securities aims to acquire Guorong Securities, furthering the consolidation movement.

Guosen's shares remain stable at 9.04 yuan each before trading was halted, aligning with a nearly 6% gain this year. Liu Xinqi, an analyst at Guotai Junan Securities, remarked, “Top-ranked brokerages have strong motives for mergers and acquisitions to enhance balance sheets.”

Financial Overview of Guosen and Vanho

While Guosen holds a significant position in the industry with a book value of 110.5 billion yuan, Vanho trails with assets of only 5.4 billion yuan, ranking 85th among 145 brokers. Encouragingly, Vanho reported a profit turnaround last year, attributed notably to proprietary trading. Guosen's acquisition strategy may thus yield substantial gains, amplifying operational efficiencies.

As Guosen embarks on this acquisition, it commits to employing independent finance and legal consultants and maintains transparency throughout the regulatory process during this stock suspension phase.