This merger holds significant symbolic importance, not only is it the largest A+H dual-market merger in the history of China's capital market and the largest integration case of listed brokerage firms in the A+H market, but it is also the first restructuring case of a leading brokerage firm under the latest version of Several Opinions of China‘s State Council on Further Promoting the Healthy Development of the Capital Market. Upon completion, the total assets and net assets of the merged entity will rank No.1 in China's securities industry.

Strong Alliance to Lead the Industry

According to the joint circular, as of the end of the third quarter of 2024, the combined net assets of the two companies amounted to RMB 341.5 billion and the net capital amounted to RMB 177.4 billion, ranking No.1 in China's securities industry. In the first three quarters of 2024, the combined net income from investment banking business amounted to RMB 3.1 billion, net interest income amounted to RMB 4.0 billion and the scale of funds raised amounted to RMB 145.8 billion, all ranking No.1 in China's securities industry.

After the merger, the two companies will unleash win-win synergies in terms of capital utilization, service capability and operational management. The merged entity will establish a new corporate governance structure, management framework, development strategy, and corporate culture. In accordance with the requirements of corporate governance, and based on the overall business objectives and strategic planning, it will conduct a comprehensive integration of its business, assets, finances, personnel, and institutions, so as to promote effective integration of its business and enhance its overall profitability. At the same time, the post-merger company will also have stronger capital strength and a more balanced asset-liability structure, which will significantly enhance its risk tolerance, improve the efficiency of capital utilization, and the effect of capital utilization, thus providing a solid financial foundation for future business development and market response.

Integration and Reorganization to Achieve Synergies

Both Guotai Junan Securities and Haitong Securities are large comprehensive financial institutions, with leading positions in capital scale, profitability and comprehensive capabilities. While both companies has their own business focus, the merger will significantly enhance their comprehensive competitiveness, facilitate the integration of resources and strategies, and complement each other’s advantages to further strengthen their business capabilities.

Based on the aggregate figures in 2023, the two companies will rank first in the industry after the merger in terms of the number of retail customers, the number of monthly active app users for retail customers, the scale and number of IPO underwriters, the revenue from public fundraising positions, the scale of custodian outsourcing and other important business indicators, as well as the number of outlets in key regions such as the Yangtze River Delta, Beijing-Tianjin-Hebei, and the Pearl River Delta.

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