Orient Securities to Merge With Shanghai Securities to Build Regional Brokerage Powerhouse

Orient Securities and Shanghai Securities, two brokerages controlled by the Shanghai municipal government, have finalized a merger and restructuring plan aimed at forming a major securities firm with a strong business brand and deep regional market presence.

Orient Securities, the acquirer, will purchase a 100 percent stake in Shanghai Securities through a combination of newly issued shares on the Shanghai stock market and cash payments, the firm said yesterday.

The new shares will be issued at CNY10.49 (USD1.45) each, about 12 percent higher than the company’s closing price of CNY9.34 (USD1.29) on April 17, the last trading day before trading was suspended due to the planned transaction, it said.

After the transaction is completed, Orient Securities’ core business will remain unchanged, it said. Its total assets are expected to swell by 21 percent to CNY5.8 trillion (USD807.1 billion), while its net assets will top CNY1 trillion (USD138.5 billion). The company’s industry ranking in the country is set to climb to 10th place from 11th.

The merged entity will have around 250 branches, including 79 in Shanghai. Both firms boast solid business foundations and customer resources in eastern China and Shanghai, and this is expected to create synergies across their core businesses.

As regulators encourage financial institutions to improve core competitiveness through mergers and acquisitions, consolidation in China’s securities industry is gathering pace.

M&A deals are reshaping the competitive landscape of the country’s securities firms, said Luo Zuanhui, chief analyst of the non-banking financial industry at Shenwan Hongyuan Research. As a result, mergers are no longer just an optional strategy for brokerages, but are increasingly becoming essential for future growth.

These mergers mainly follow two trends, namely consolidation between firms under the same controlling shareholder and mergers between brokerages based in the same region, said Luo, citing completed and ongoing merger cases.

For instance, China International Capital Corp. began an absorption merger process last November involving Dongxing Securities and Cinda Securities. All three firms are backed by sovereign wealth fund Central Huijin Investment. The deal has lifted CICC’s industry ranking to fourth place from sixth.

Meanwhile, two leading Shanghai brokerages, Guotai Junan Securities and Haitong Securities, kicked off a merger and restructuring plan in September 2024. The combination of the country’s second and fifth largest securities firms has established itself the largest brokerage in China.

And the recent merger between Soochow Securities and East China Securities, both headquartered in eastern Jiangsu province, was this year’s first merger deal in the securities industry.

Orient Securities’ mainland shares [SHA: 600958] soared as much as 6 percent before ending the day up 2.1 percent at CNY9.54 (USD1.40). Its Hong Kong-traded stock [HKG: 3958] closed down 5.9 percent at HKD6.05 (USD0.77) after climbing 2 percent earlier in the day.