In the New Year of the Rabbit, the controlling shareholders of securities firms changed hands： Tianfeng and Kyushu completed the change of controlling shareholders, and the change of actual controller

The change of controlling shareholder and actual controller has always been a major event concerned by the capital market. In February, a number of brokers welcomed their owners to change hands.

Today (February 16th) evening, TF Securities (SH601162, share price of 2.99 yuan, 25.911 billion yuan) announced that the company had recently received the Confirmation of Transfer Registration of China Securities Depository and Clearing Co., Ltd. from Hongtai Group and Lianfa Investment Group respectively. After the completion of this equity change, Lianfa Investment Group will no longer hold shares in the company, and Hongtai Group will become the controlling shareholder of TF Securities.

Earlier, official website of the China Securities Regulatory Commission showed that the change of major shareholders and actual controllers of Hengtai Securities was approved, and Beijing Huarong Comprehensive Investment Co., Ltd. will legally acquire 569 million shares of Hengtai Securities, and Beijing Financial Street Investment (Group) Co., Ltd., which wholly owns Huarong Investment, will become the actual controller of Hengtai Securities. In addition, on January 19th, Kyushu Securities completed the equity delivery, and the acquisition of Kyushu Securities by Wuhan Financial Holding Group was fully completed.

The "change of ownership" of the three securities firms seems to be irrelevant, but they are actually inextricably linked. Behind it is the major layout of Hubei’s financial system.

First of all, let’s look at TF Securities’s "change of ownership". This is one of the focus events in the securities industry since 2022.

On January 25th, 2022, Hubei Hongtai Group was unveiled. According to its introduction in official website, the Group is a 100% holding enterprise of Hubei Provincial Department of Finance, and it is the centralized holding entity of state-owned shares (capital) authorized by Hubei Provincial Government, the operating entity of provincial-level state-owned capital, and the orderly advance and retreat channel of provincial-level state-owned capital.

On April 1, 2022, shortly after the establishment of Hongtai Group, TF Securities announced that Renfu Medicine, the then shareholder of the company, planned to transfer its 680 million shares in TF Securities by agreement, with a corresponding price of 2.124 billion yuan. Chen Zhixiang, the general manager of Hongtai Group, publicly stated that as the core of the development of financial control platform, it is to obtain a financial license, and the equity change of TF Securities has attracted more market attention.

On September 30th, Hongtai Group spent another 1.677 billion yuan to acquire 5.99% equity in the hands of TF Securities’s three shareholders, Lianfutou Group. In the two equity acquisitions, Hongtai Group invested a total of 3.801 billion yuan and acquired 13.84% equity of TF Securities.

On December 27th, 2022, China Securities Regulatory Commission approved Hongtai Group to become the controlling shareholder of TF Securities. The announcement this evening marks that TF Securities has completely bid farewell to the situation that there is no controlling shareholder or actual controller in the ownership structure, and has become a mixed ownership structure dominated by state-owned assets and entered a new stage of development.

The relevant person in charge of Hubei Hongtai Group has also publicly stated that TF Securities is a listed securities firm, and the integrated development of the two sides should meet the requirements of both financial supervision and state-owned assets supervision. The integration and development of the two sides will achieve the "four invariants" of adhering to the marketization direction, the general rules of listed securities companies, the talent incentive mechanism and the strategic objectives. Hubei Hongtai Group will give full play to the leading role of state-owned controlling shareholders on the basis of maintaining the operational independence of TF Securities, and form a win-win situation with TF Securities on the premise of safety and compliance development.

However, judging from the performance, TF Securities’s performance last year was not satisfactory.

According to the performance forecast released at the end of January, TF Securities predicted that the net profit of returning to the mother in 2022 would be 1.271 billion yuan, while the net profit of returning to the mother in 2021 would be 586 million yuan, and the net profit of returning to the mother would turn from profit to loss. According to the company, under the severe market environment in 2022, the company suffered losses in 2022 due to the sharp decrease of self-operated business income with relatively high revenue, provision for impairment of various assets and huge losses of shareholding units.

Also in 2022, the equity of another brokerage, Kyushu Securities, was also included in the state-owned assets of Hubei Province.

In April 2022, Jiuding Group, the original shareholder of Kyushu Securities, announced that it planned to transfer 72.5% of its shares in Kyushu Securities at a transaction price of 4,886.5 million yuan.

On December 14, 2022, the CSRC approved Wuhan Development and Investment Co., Ltd., Wuhan Optics Valley Financial Holding Group Co., Ltd., Wuhan Sanheng Investment Holding Group Co., Ltd. and Wuhan Zhongtian Yucheng Commercial Management Co., Ltd. under Wuhan Jinkong to become the major shareholders of Kyushu Securities, and Wuhan Jinkong became the actual controller of Kyushu Securities.

On February 10, 2023, the subscription number of Kyushu Securities issued a document saying that on January 19, Kyushu Securities completed the equity delivery, and the acquisition of Kyushu Securities by Wuhan Financial Holding Group was fully completed. On February 8, the nomination of directors, supervisors and senior executives of Kyushu Securities was approved through research. Merlin, deputy secretary and general manager of Wuhan Jinkong Party Committee, holds the post of Party Secretary of the company, and Deng Hui, former president of changjiang securities, serves as deputy secretary and general manager of Kyushu Securities Party Committee.

Before being acquired by Wuhan Financial Holdings, Kyushu Securities had experienced a "dark moment" for a period of time. In 2018, due to the "thunder" of the asset management plan, Kyushu Securities lost more than 500 million yuan and was once suspended from relevant business qualifications for six months. Since then, the company has also become the focus of public concern because of claiming more than 300 million yuan from former employees.

After 2020, the aftermath of risk events gradually dispersed, but influenced by past events and the scale of net capital, the absolute number of profits of Kyushu Securities has been ranked in the middle and lower reaches of the industry. In 2020, Kyushu Securities achieved revenue of 631 million yuan, a year-on-year increase of 23.16%, and net profit of 132 million yuan, a year-on-year increase of 433.44%. In 2021, the revenue of Kyushu Securities was 713 million yuan, a year-on-year increase of 13%; The net profit was 126 million yuan, a year-on-year decrease of 4.39%.

After Wuhan Financial Holdings entered Kyushu Securities and Hongtai Group entered TF Securities, there are now three local securities firms in Hubei Province-Kyushu Securities, TF Securities and changjiang securities.

In addition, it is worth mentioning that although the largest shareholder in changjiang securities is the well-known Xinliyi Group, Hubei Hongtai Group is the seventh largest shareholder in changjiang securities with a shareholding ratio of 3.22%.

The original largest shareholder of Hengtai Securities was TF Securities. It took TF Securities only three years from the acquisition of Hengtai in 2019 to the withdrawal of its position as the largest shareholder.

On the evening of September 30, 2022, TF Securities announced that the company had signed an agreement with Beijing Huarong Comprehensive Investment Co., Ltd. that day, and planned to transfer 249 million shares of Hengtai Securities (accounting for 9.5754% of the total share capital of Hengtai Securities) to Beijing Huarong at a price of about 7.22 yuan/share, totaling 1.8 billion yuan.

Beijing Huarong is a holding subsidiary of Financial Street Group. Financial Street Group, its holding subsidiary Beijing Financial Street Xihuan Real Estate Co., Ltd. and its wholly-owned subsidiary Beijing Huarong Infrastructure Investment Co., Ltd. hold 6.35%, 8.12% and 5.95% respectively, totaling 20.42%. In the future, after the completion of the equity delivery of Hengtai Securities acquired by Beijing Huarong, Financial Street Group and its concerted parties will hold a total of 29.99% equity of Hengtai Securities and become the largest shareholder of Hengtai Securities.

It is worth mentioning that poor management of Hengtai Securities is also one of the main reasons for TF Securities’s losses in 2022.

On February 10th, 2023, Hengtai Securities announced that according to the information available to the company and the preliminary evaluation of the unaudited comprehensive management accounts for the year ending December 31st, 2022, it is expected that the company’s net profit attributable to shareholders of the parent company for the year ending December 31st, 2022 will be about RMB-1.159 billion, and the company’s net profit attributable to shareholders of the parent company for the year ending December 31st, 2021 will be about RMB 279 million. The company believes that compared with 2021, the decline in the company’s operating performance is mainly caused by losses in provision provision, securities investment business and direct investment business.

national business daily