Haitong moves to buy out Taifook

A branch of Haitong Securities in Jilin, Jilin Province. Haitong Securities is reported to have inked an agreement to acquire Hong Kong-based Taifook. Photo: CFP

By Sun Zhe

Haitong Securities reached an agreement to buy out Hong Kong-based Taifook in an attempt to gain international experience as it expands.

This purchase by Shanghai-based Haitong, the country's second largest brokerage, is the first takeover of a Hong Kong brokerage by a mainland counterpart.

Haitong will buy all of NWS Holdings' 62 percent, or 432 million shares of Taifook, at HK$5 ($0.65) per share for a total of HK$2.16 billion ($316.4 million).

Haitong's rivals in the acquisition included Industrial and Commercial Bank of China and China Construction Bank, said a report Sunday in China Times, citing an anonymous Haitong insider.

"The purchase of Taifook will give Haitong some international experience, which will come in handy when the international board is launched on the Shanghai Stock Exchange next year," Zhu Xiaodong, a Beijing-based financial analyst, said Sunday.

Multinationals will be allowed to have public offerings on the A-share market of the Shanghai Stock Exchange next year, Tu Guangshao, Shanghai's vice mayor, said in early August.

Founded in 1973, Taifook was listed on the Hong Kong Stock Exchange in 1996. It now has representative offices in Shanghai, Beijing, and six other cities on the mainland.

Mainland brokerages prefer to go to Hong Kong first as they attempt to become more international, said Tan Ruyong, a professor with Shanghai University of Finance and Economics.

"The firms need to learn to swim in the ocean," said Tan. "The mainland market is more like a small pond."

Buying a Hong Kong brokerage is a shortcut into the market, as it lets the company avoid complicated procedures required to start a subsidiary of its own.

Haitong shares were suspended from trading last Monday. Shares of Taifook and NWS also stopped trading in Hong Kong last week.
 

Explore the World, Understand China!
Please log on www.gloaltimes.cn