GF Securities Co, China's No. 4 broker, said yesterday it plans to buy control of a listed expressway builder with shares and cash in an attempt to become the nation's first broker to go public in four years.
The Guangdong-based brokerage will swap 0.83 of its own stock with each share of Shenzhen-traded Yan Bian Highway Construction Shares Co and change the public firm's listing name to GF Securities, it said in a statement.
The broker will also pay 40 million yuan (US$5.04 million) to Yan Bian as part of the deal and shift the public company's headquarters to the southern city of Zhuhai in Guangdong from the northeastern city of Yanji in Jilin province, it said.
China's stock market regulators are urging healthy securities houses to seek public funds for expansion and bolster their transparency amid a nationwide campaign to clear up the scandal-ridden industry.
Acquiring an existing listed firm, or a method called "back-door" listing, can help brokers circumvent the country's listing criteria, which require profits for three straight years.
To facilitate the conversion, Yan Bian will buy back and cancel 85 million shares, or 46.2 percent of total equity, from Jilin Aodong Pharmaceuticals Group, according to the statement.
After the stock swap, GF will control 95.4 percent of the highway builder, it said. Big shareholders of GF Securities promised not to sell their holdings at Yan Bian for between 12 months and 36 months, the statement said.
China has two listed brokers: Hong Yuan Securities and Citic Securities.
(Shanghai Daily September 27, 2006)
