SinoPac Securities Co (永豐金證券) on Friday said it is to acquire two brokerages in a bid to bolster its wealth management business in Taiwan and expand the operational scale of SinoPac Securities (Asia) Ltd (永豐金證券亞洲), its Hong Kong-based subsidiary.
SinoPac Securities plans to acquire BEA Wealth Management Services Taiwan Ltd (東亞證券) for NT$375 million (US$11.53 million) and Tung Shing Holdings Co (東盛控股) for HK$540 million (US$69.68 million), the securities arm of SinoPac Financial Holdings Co (永豐金控) announced at a news conference in Taipei.
BEA Wealth Management is a Taiwan-based subsidiary of Hong Kong’s Bank of East Asia Ltd (BEA, 東亞銀行) specializing in re-consigned trading and has two service locations.
Tung Shing Holdings is also a subsidiary of BEA, which specializes in agency brokerage and margin financing, according to SinoPac Securities.
SinoPac Securities expects the purchase of BEA Wealth Management to boost its reconsigned trading business through larger operating scale with better efficiency, while pushing the company’s ranking among domestic peers to third place from fourth, the company said.
Bringing Tung Shing Holdings under its fold is expected to help SinoPac Securities better serve Hong Kong customers, the Taiwanese brokerage said, adding that its Hong Kong-based subsidiary would rise to be the second-largest agency broker among Taiwanese peers in Hong Kong.
“We hope to answer the Financial Supervisory Commission’s call to tap into the vast Asian markets with these two acquisitions,” SinoPac Securities chairman Chen Wei-long (陳惟龍) said. “Continuous innovation and expansions in economies of scale are key to improving competitiveness, and acquisition is the fastest method to achieve the latter.”
The two deals are expected to be completed before the end of March next year, pending regulatory approval, the company said.
“We are seeking other markets amid an unfavorable investment environment and limited upside potential on the local bourse, despite a recent recovery in average daily turnover,” said Mei Lan (藍玫君), senior executive vice president of SinoPac Securities wealth management and offshore securities business group.
She said the two companies involved in the acquisition plan do not service retail investors who trade Taiwan stocks, as they focus on wealth management and investments in international financial products.
SinoPac Securities is expected to purchase BEA Wealth Management with cash, and the company is seeking a syndicated loan to fund its acquisition of Tung Shing Holdings, company president Yeh Huang-chi (葉黃杞) said.
The deals are the first time a Taiwanese brokerage has acquired its Hong Kong-based peers.
Meanwhile, Hontai Life Insurance Co (宏泰人壽) on Friday announced that it had devised a NT$8.13 billion capital increase plan, which is expected to receive approval at an extraordinary general meeting scheduled to take place next month.
The company said the proposed capital enhancement is aimed at preventing being put under government receivership by the Financial Supervisory Commission.
The commission had warned that the insurer’s risk-based capital (RBC) ratio was inadequate.
Hontai Life’s capital increase plan consists of NT$6.98 billion in real estate assets, and NT$1.15 in funds raised through a public offering of new shares at NT$5.76 per share.
Hontai president and chief executive officer Tom Tang (湯維華) expects the capital plan to push the company’s RBC to a more favorable level of more than 250 percent.
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