The first successful merger and acquisition of securities firms in this round has been approved! Guolian and Minsheng will move closer to formal cooperation, and three major issues will continue to be monitored.

"Guolian+Minsheng" merger and reorganization plan has officially passed the review. The consensus in the industry is that Guolian will further ascend in the ranks of top brokerages. On December 17th, during the 6th review meeting of the 2024 merger and reorganization committee of the Shanghai Stock Exchange, Guolian's issuance of A-shares to purchase 99.26% of Minsheng Securities' shares and raise capital was approved by the committee. At the same time, Guolian also issued an announcement stating that the issuance of shares to purchase assets and raise capital, as well as related-party transactions, had been approved by the Shanghai Stock Exchange's merger and reorganization review committee. Since being accepted by the Shanghai Stock Exchange on September 27th, in less than 3 months, the Guolian-Minsheng merger plan has been approved by the exchange, becoming the first brokerage merger project to pass after the new "Guo Jiu" policy. After integration, Guolian Group and 6 other concerted action parties will become the controlling shareholders, with Wuxi State-owned Assets Supervision and Administration Commission as the actual controlling entity. The transaction will not lead to a change in the controlling interest of the listed company. Guolian's latest announcement According to Wind data, from 2021 to 2023, Guolian and Minsheng Securities ranked around 40 in key indicators, demonstrating similar overall strength. If combined, the total assets of the merged company will reach 150 billion RMB, significantly improving their rankings. In 2023, Guolian and Minsheng's operating income ranked 42 and 32, net profit ranked 38 and 40, total assets ranked 32 and 44 respectively. After the merger, the combined company's operating income, net profit, and total assets will rank around 25, 28, and 23 respectively. Specifically regarding the expectations for business integration, the investment banking business is most anticipated. Minsheng Securities' investment banking and equity investment businesses have strong advantages. From January to September 2024, the Shanghai and Shenzhen Stock Exchanges approved 35 IPO projects, involving 19 sponsoring institutions, with Minsheng Securities having 2 approved projects, ranking third. It is believed that through the combined strengths of Minsheng Securities, the new company will rapidly enhance its capabilities in investment banking and equity investments, strengthening its position in these areas. Furthermore, details regarding the procedure flow and business integration are crucial considerations. The success of this transaction, "Guolian+Minsheng," is expected to become the first brokerage merger case approved after the Central Financial Work Conference and a model case for the integration of the Yangtze River Delta. Industry insiders view the approval of this transaction as typical and exemplary, believing that brokerage mergers will further enhance the industry's competitiveness, optimize resource allocation, promote healthy market development, boost market participants' confidence, and inject new vitality into China's capital market growth in the long run. Apart from the high expectations for the synergy of "1+1>2", three other aspects are of interest: Firstly, what important steps need to be completed before the acquisition and absorption are finalized? Meeting shareholder change requirements and obtaining approval from the China Securities Regulatory Commission. In September, the CSRC received applications for Guolian's major shareholder or company controller change, as well as Minsheng Securities' application for a change in major shareholder or company controller. Additionally, necessary approvals, registrations, or permits as required by laws, regulations, or regulatory authorities must be obtained. Secondly, how will the business integration plan progress? The plan is currently being prepared and pending official announcement. In September, the CSRC also received applications for the establishment of Guolian's professional subsidiaries, likely related to the business integration plan. It is clear that the integration plan will proceed in compliance with regulatory requirements. It is worth mentioning that personnel and structural adjustments will also be closely monitored and guided by regulatory authorities to ensure the smooth integration of assets, businesses, institutions, and personnel of Guolian and Minsheng Securities. Thirdly, the China Securities Regulatory Commission is currently soliciting industry opinions on the "Guidelines for Consolidating Financial Statements of Securities Companies (Trial)." Before the trial implementation of consolidated supervision, securities companies will continue to adhere to the rules of parent company financial reporting. This could potentially impact the calculation of securities companies' net capital by deducting long-term equity investments in subsidiaries from the parent company's net assets, leading to concerns about pressure on the net capital due to the establishment of two major subsidiaries. Looking back at previous rankings and other data, the calculation of net capital may use a specific consolidation statistical method. This means that for wealth management subsidiaries, investment banking subsidiaries, and asset management subsidiaries, their inclusion in the parent company's financial statements will offset the potential impact on the parent company's net capital calculation. Xu Yishan, Chief Analyst at Founder Securities, stated that the company's net asset scale will reach the 16th position in the industry. They are expected to further strengthen their overall capabilities based on the synergy of both parties, enhancing their competitiveness in investment banking and regional layout, and significantly increasing their net capital and comprehensive strength after the merger to prepare for long-term development. Many brokerage mergers and reorganizations are currently underway.There are many highlights in December.The wave of securities mergers and acquisitions restructuring has been emerging since the Central Financial Work Conference in October 2023 proposed nurturing first-class investment banks and institutions. In March 2024, the China Securities Regulatory Commission further proposed the formation of 2 to 3 investment banks and institutions with international competitiveness and market leadership, leading to a continuous increase in securities mergers and acquisitions. Luo Zuanhui, chief analyst of non-bank securities at Shenwan Hongyuan Group, stated that there have been a total of 8 securities industry merger cases this year, with local state-owned assets becoming important forces in mergers and acquisitions. Securities firms under the same controlling shareholder have clearer equity relationships, better corporate culture integration, and a smoother merger and restructuring process, allowing the controlling shareholder to integrate internal securities resources and form group operation to better serve national strategies. Other progress indicators include the "Guotai Junan + Haitong" merger, with the approval of the China Securities Regulatory Commission pending. The "Western + Guorong" merger is also making progress, as well as the "Guoxin + Wanhe" and "Zheshang + Guodu" mergers, with detailed transactions disclosed recently. "Guosen + Wanhe" also made significant progress with the announcement of a transaction worth 5.192 billion yuan to acquire 96.08% of Wanhe Securities' shares through the issuance of A-shares. The progress of the "Zhejiang Merchants + Guodu" merger is also moving quickly, with Zheshang acquiring 34.25% of Guodu Securities' equity, obtaining substantial progress in just under 5 months. The "Ping An + Fangzheng" and "Huachuang + The Pacific" mergers have not shown any recent progress. However, regulatory support for the securities industry through mergers and acquisitions to strengthen and optimize is expected to reflect further progress in the future.