Everbright Securities Agrees to Buy SHK & Co.’s Brokerage Unit

Everbright Securities Co., China’s eighth-biggest brokerage, agreed to buy a controlling stake in Sun Hung Kai & Co.’s securities and wealth-management businesses for HK$4.1 billion ($529 million).

Everbright Securities will pay cash for 70 percent of the Hong Kong-based company’s Sun Hung Kai Financial Group Ltd. unit, according to a statement filed to the city’s stock exchange on Monday.

An acquisition will help Everbright bolster its presence in the city after the introduction of a Shanghai trading link that allows foreigners to buy a net 13 billion yuan ($2.1 billion) of mainland shares each day. Officials said in January they’re discussing an expansion of the program to Shenzhen.

“Chinese brokerages, especially the larger ones, have been stepping up their efforts to expand overseas following the Shanghai-Hong Kong stock connect,” He Zongyan, a Shanghai-based analyst at Shenyin & Wanguo Securities Co., said before the announcement. Brokerages are seeking to build Hong Kong networks “as quickly as possible,” He said.

Haitong Securities Co., based in Shanghai, bought a majority stake in Hong Kong’s Taifook Securities Co. for $235 million in 2009, the first purchase of an overseas brokerage by a mainland securities firm. The deal was followed by Citic Securities Co.’s 2013 takeover of Hong Kong-based CLSA Ltd., which provides equity broking, research and asset-management services in 21 locations across Asia.

Shares Suspended

Shares of Everbright Securities and Sun Hung Kai & Co., which were suspended pending announcements, are due to resume trading Tuesday.

Everbright Securities’s net income rose 907 percent to 2.07 billion yuan last year, according to a preliminary earnings report last month. Its Hong Kong unit, set up in 2010 with HK$2 billion of registered capital, offers stock trading, underwriting and investment-management services, according to the company’s 2013 annual report.

Everbright Securities is 33.3 percent owned by Hong Kong-listed China Everbright Ltd., whose operations include private equity investment, asset management and aircraft leasing, according to China Everbright’s website.

Sun Hung Kai & Co. provides wealth management, securities brokerage and consumer finance in 180 locations across Hong Kong, Macau and China, according to company statements. It posted net income of HK$610.3 million for the six months through June.

Everbright Group has “connections in China and a big client base,” Sun Hung Kai Financial Chief Executive Officer William Leung said on a conference call Monday evening in Hong Kong. “We believe these will bring us some clients in the future. We know Everbright also has plans for overseas markets and it can use us as a platform to facilitate these plans.”

UBS Group AG advised Sun Hung Kai & Co. on the transaction, according to the exchange filing.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE