According to sources familiar with the matter, state-owned China International Capital Corp (CICC) is poised to merge with China Galaxy Securities, creating the country's third-largest brokerage with $193 billion in assets. The proposed merger, the second among major players in China's $1.6 trillion securities industry in recent months, has garnered support from Chinese authorities and is expected to be officially announced soon.
Both Hong Kong and mainland-listed shares of CICC and Galaxy experienced an upsurge in value following news of the impending merger. The two entities, backed by China Investment Corporation (CIC), aim to consolidate through a share swap, although specific financial terms of the agreement have yet to be disclosed.
Upon completion, the combined entity will surpass Huatai Securities to become China's third-largest brokerage, with regulatory and shareholder approvals necessary for the deal to proceed. The consolidation aligns with Beijing's strategy to strengthen domestic investment banks, positioning them as formidable competitors to global counterparts like Goldman Sachs and Morgan Stanley, which have been expanding their presence in China.
In an environment characterized by a sluggish economy, market volatility, and increased regulatory scrutiny, the merged firm is poised to navigate challenges more effectively. The merger signifies a broader trend towards consolidation in China's brokerage industry, underscored by regulatory support for mergers and acquisitions to enhance competitiveness and efficiency in the sector.