In May 2024, the China Securities Regulatory Commission (CSRC) revised and released the “Regulations on Strengthening the Supervision of Listed Securities Companies”, which mentioned that the initial public offering of securities and listing for trading and refinancing activities of securities companies should, in light of shareholder returns and value creation capabilities, as well as their own operating conditions, reasonably determine the scale and timing of financing, strictly regulate the use of funds, and focus on their main responsibilities and business. Prudently carry out high capital consumption businesses and enhance the efficiency of fund utilization.
Under the influence of factors such as the regulatory authorities’ advocacy of “capital conservation”, the refinancing plans of several securities firms, including Zhongyuan Securities and Caida Securities, have been terminated. Nanjing Securities has also revised its refinancing plan. The 5 billion yuan private placement will be specifically targeted at light capital businesses such as investment banking and wealth management, and high capital consumption businesses such as proprietary trading will be reduced.
However, since May this year, new changes have emerged in the refinancing of securities firms. The private placement matters of Tianfeng Securities, Nanjing Securities and Zhongtai Securities have successively made progress. In the eyes of industry insiders, the refinancing matters of securities firms are gradually being “loosened”, and the industry’s refinancing has entered a “conditional normalization” stage.
In its relevant research report, Kaiyuan Securities also mentioned that there are signs of “loosening” in the private placement of securities firms. The three securities firms that have recently updated their progress share two common points: First, the private placement issuance targets all include their respective controlling shareholders. Second, the fundraising will be more focused on business segments related to “serving the real economy”.
On May 9th, the private placement of Tianfeng Securities was approved by the Shanghai Stock Exchange. The prospectus shows that Tianfeng Securities plans to raise no more than 4 billion yuan in total this time. On the evening of June 6th, the China Securities Regulatory Commission issued a reply, approving Tianfeng Securities’ application for registration of issuing stocks to specific targets. This reply is valid for 12 months from the date of approval for registration.
Subsequently, on May 16th, Nanjing Securities announced that its 5 billion yuan private placement matter had been accepted by the Shanghai Stock Exchange. It has been nearly two years since Nanjing Securities first disclosed its private placement plan in 2023.
On the evening of May 28th, Zhongtai Securities announced that its 6 billion yuan private placement matter had been accepted by the Shanghai Stock Exchange. Zhongtai Securities launched this private placement plan on June 30, 2023, which is the company’s first equity financing project since its listing in 2020.
In terms of financing direction, securities firms’ refinancing is shifting from “scale expansion” to “quality improvement and efficiency enhancement”.
Zhongtai Securities stated that it plans to use the funds raised from this private placement to increase the capital of its wholly-owned alternative investment subsidiary, Zhongtai Venture Capital, to promote the implementation of high-quality projects, enhance the efficiency of direct financing, and support the development of the real economy. At the same time, increase investment in purchasing securities such as government bonds, local government bonds and corporate bonds to better serve the development of the real economy.
Nanjing Securities stated that this private placement will help the company enhance its service efforts for technology innovation enterprises representing new quality productivity and “specialized, refined, distinctive and innovative” enterprises. Through equity investment, it will guide capital to invest early, small, long-term and hard technologies, thereby effectively playing the intermediary role of securities companies and serving the integration of local technological innovation and industrial innovation. Be a good “service provider” for direct financing and a “gatekeeper” of the capital market.
