Everbright Securities Said Set to Buy Sun Hung Kai BrokerCathy Chan and Jonathan Browning
Everbright Securities Co., China’s eighth-biggest brokerage, is nearing an agreement to buy control of Sun Hung Kai & Co.’s securities and wealth-management businesses for about $500 million, people with knowledge of the matter said.
Everbright Securities will acquire about 70 percent of the Hong Kong-based company’s Sun Hung Kai Financial Ltd. unit, the people said, asking not to be identified as the details are private. The deal may be announced as soon as Monday in Hong Kong, two of the people said.
An acquisition would 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,” said He Zongyan, a Shanghai-based analyst at Shenyin & Wanguo Securities Co. Brokerages are aiming 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.
The acquisition by Everbright Securities doesn’t include Sun Hung Kai & Co.’s consumer-lending unit United Asia Finance Ltd., the people said. Everbright Securities representatives didn’t answer phone calls seeking comment, while Sun Hung Kai & Co. declined to comment in an e-mailed statement.
Shares of Everbright Securities and Sun Hung Kai & Co. are suspended from trading pending announcements.
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 ($258 million) 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 ($79 million) for the six months through June.