Guolian wins auction for Minsheng Securities after creditors seize asset from debt-stricken developer Oceanwide group

Guolian Securities’ bid of 9.1 billion yuan (US$1.3 billion) topped rivals after the asset was auctioned on JD.com’s online platform

Creditors won a local court approval last month to sell the stake to recover debt owed by its parent Oceanwide, according to local media

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A signboard outside a building where Minsheng Securities operates in mainland China. Photo: Weibo

Published: 7:30pm, 15 Mar 2023

Guolian Securities, an investment banking group listed in Hong Kong, has bought a 30.3 per cent stake in Minsheng Securities for 9.1 billion yuan (US$1.3 billion) through an online auction, after creditors seized the asset to recover debt owed by its distressed parent Oceanwide Holdings.

The company outbid rivals including Soochow Securities and Zheshang Securities after a 162-round of bidding war for the block of shares. It was transacted on JD.com’s auction platform, with a reserve price of about 5.9 billion yuan. Creditors last month obtained approval from the Jinan Intermediate People’s Court to sell the shares, according to a local media report on Sina.com.

Shenzhen-based developer Oceanwide had 226.2 billion yuan debt as of July 2021, accumulated from an aggressive expansion at home and abroad, only to fall into a debt trap as borrowing costs surged and financing dried up.

Auction details on the sale of Minsheng Securities. Photo: Handout

Like many peers, Oceanwide ran into liquidity problems not long after Beijing squeezed weak and overleveraged players – from China Evergrande to Guangzhou R&F Properties and Kaisa Group, to contain systemic risk in the local financial system.

Guolian’s shares jumped 2.9 per cent to HK$3.85 in Hong Kong trading, giving it a market capitalisation of HK$31.5 billion. The stock has declined 6 per cent so far this year, after losing 2 per cent in 2022. Minsheng Securities reported a 33 per cent jump in net profit in 2021, according to local media.

Chairman Ge Xiaobo is leading an expansion drive at Guolian Securities following a stint at Citic Securities in various senior roles. Photo: Jonathan Wong

Led by chairman Ge Xiaobo, a seasoned investment banker and a former senior executive at Citic Securities, Guolian is expanding in an “oligarchic market” where the total profits of the top three companies accounted for 23 per cent of the entire industry, he said.