State-owned China International Capital Corp (CICC) is set to merge with its peer China Galaxy Securities, said five sources, in a deal that would create the country’s third-largest brokerage with US$193 billion in assets.
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A combination of CICC and Galaxy, which would mark the second mega merger in China’s US$1.6 trillion securities industry in a matter of months, has secured backing from Chinese authorities in recent weeks and could be announced in the coming weeks, said the sources.
Both brokers, which count sovereign wealth fund China Investment Corporation (CIC) as their biggest shareholder and parent, seek to merge via a share swap, said two of the sources. Financial details of the planned transaction were not immediately known.
The combined entity, with 1.4 trillion yuan (US$193 billion) in total assets, is set to surpass Huatai Securities to become China’s third-largest brokerage. The planned deal will require regulatory and shareholder approvals, said the five sources who have knowledge of the matter.
Shares of CICC in Hong Kong soared over 8 per cent after the Reuters report, while China Galaxy jumped 10 per cent.
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The merger would come amid Beijing’s efforts to establish large and competitive domestic investment banks as a counterweight to global banks such as Goldman Sachs and Morgan Stanley that have in recent years taken full control of their China businesses and are eyeing a bigger market share.