Foreigners hunt for M&A of securities companies

23-Oct-2019 Intellasia | Dautu Online | 6:02 AM Print This Post

Not only stopped at securities companies announcing to become 100 percent foreign-owned companies such as KIS Vietnam Securities Corporation, Mirae Asset Securities (Vietnam) Limited Liability Company, KB Securities Vietnam Joint Stock Company, YUANTA Securities Vietnam Joint Stock Company, but foreign capital flows were still hunting for many other securities companies to join Vietnam stock market.

The focus was on small capital securities companies

In addition to securities companies that were in the process of negotiating to sell a part of capital to foreign partners, or sell shares at a controlling rate, many opinions of those working in the industry said that foreigner investor was still searching to buy small and inefficient securities companies with the goal of the operating license in this field.

According to the data on the State Securities Commission of Vietnam, in the past, the Vietnam stock market had more than 100 securities companies, but then there were only more than 70 companies, many of which had merged or dissolved, some companies were even revoked licenses.

Of course, not all securities companies were doing business effectively, even if there were companies with losses or with the little profit enough for them to exist. The number of brokerage market shares also clearly demonstrated that fact, when 70 percent of the brokerage market share belonged to TOP 10, including very new faces from securities companies after returning to foreign partners, raising capital and having an excellent rebound in market share.

In the market, there were many offers to buy securities companies from foreign investors from Hong Kong, China, Korea, Singapore, and so on, with very diverse buying needs.

The report of the Securities Investment Review said that, in some deals that were in the process of negotiation, basically selected partners, ‘targeted’ companies having quite good business activities.

Accordingly, without excluding the possibility from then until the first half of 2020, the market would record the results of these deals.

In spite of neglecting the relatively large and seemingly predictable deals, the foreign capital inflow continued in the smaller size securities companies.

Many investors were still in the process of exploring to buy suitable securities companies. Sharing from some people who often carried out those kinds of brokerage deals, some Chinese investors wanted to purchase securities companies mainly because of obtaining licenses, so they did not notice how the company’s customer system was and how the company team was.

Their pricing was also simple which was offering $1 million for the license, plus the remaining cash, which was a basic value of the business value.

As for the seller, in a small scale securities company, there were also significant internal shareholders holding dominant shares over 51 percent that wanted to divest.

For example, in domestic securities companies, major internal shareholders wished to sell a total of about 65 percent of the capital, but the partners wanted to buy at a higher level or the entire company. He said that the shareholders could ‘convince’ and collect a total of about 85 percent. Currently, the service had not been finalised.

Bright movement in some securities companies with new owners

According to FiinGroup data, by the end of Q2/2019, there were 17 securities companies with unprofitable business results. Some of these companies were reviving when they received a new factor in their business, such as Vina Securities Joint Stock Company (VNCS), after raising capital and registering transactions on the Unlisted Public Company Market (UPCoM), made more than 5 billion dong in 2018.

In 2019, VNCS’s activities were also more exciting when opening more transaction branches, recruiting and launching preferential packages and promotions with low fees and interest rates.

Or like HFT Securities Corporation, the six-month profit was only more than 100 million dong, but the highlight of HFT was that in May, the new owner was officially Hanwha Investment & Securities of South Korea.

According to DealStreetAsia, there was a deal worth about 5 billion Korean won (approximately $4.3 million) for 90.5 percent of HFT.

According to the Securities Investment Review, SJC Securities Corporation (SJCS) also had Korean investors who want to join. However, the selling price and the rate had not been revealed.

That list was only one of the filters to predict that securities companies might be revived when extra flow of money was poured into.

The need to buy securities companies to have operation license was considered by many people to be real and increasing. The addition of new ‘players’ would help improve the service quality of the securities industry, as well as help the competition to become fiercer.


Category: Stocks, Vietnam

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