Guolian wins auction for Minsheng Securities stake

Bid of 9.1 billion yuan sees investment bank take 30 per cent of firm seized by Oceanwide creditors

Guolian Securities has bought a 30.3 per cent stake in Minsheng Securities for 9.1 billion yuan (HK$10.4 billion) through an online auction triggered after creditors seized Minsheng to recover debt owed by its parent Oceanwide Holdings.

Hong Kong-listed investment bank Guolian outbid rivals including Soochow Securities and Zheshang Securities after a 162round bidding war for the block of Minsheng shares.

The bid was transacted on JD.com’s auction platform, with a reserve price of about 5.9 billion yuan. Creditors last month obtained approval from the Jinan Intermediate People’s Court to sell the shares, according to a media report on Sina.com.

Shenzhen-based developer

Oceanwide had 226.2 billion yuan in debt as of July 2021, accumulated in an aggressive expansion at home and abroad that went sour as borrowing costs surged and financing dried up.

Like many peers, Oceanwide ran into liquidity problems not long after Beijing squeezed weak and overleveraged players – from China Evergrande to Guangzhou R&F Properties and Kaisa Group – to contain systemic risk in the financial system.

China Oceanwide Holdings, the troubled developer’s Hong Kong-listed unit, last month separately warned of possible losses of HK$2.3 billion to HK$2.7 billion for the year 2022, on top of a HK$5.4 billion loss in 2021.

Guolian’s shares yesterday rose 2.9 per cent to HK$3.85 in Hong Kong trading, giving it a market capitalisation of HK$31.5 billion. The stock has declined 6 per cent so far this year, after losing 2 per cent in 2022. Minsheng Securities reported a 33 per cent jump in net profit in 2021, according to local media.

Led by chairman Ge Xiaobo, a former senior executive at Citic Securities, Guolian was expanding in an “oligarchic market” where total profits of the top three companies accounted for 23 per cent of the entire industry, he said.

The firm, which offers brokerage, wealth management and bond underwriting, last month agreed to buy 49 per cent of Zhongrong Fund for 1.44 billion yuan, pending a full takeover at a later date.

Ge had said in August he saw more business opportunities from Beijing’s push for a registration-based system for domestic fundraising to spur stock listings.

“The [listing] review speed is accelerated, the expansion of capital market scale is boosted, and the investment banking business shows an overall growth trend,” Ge told shareholders before the system was applied across the broader onshore market.