[HONG KONG] 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 US$500 million, a person with knowledge of the matter said.
Everbright Securities will acquire about 70 per cent of the Hong Kong-based company's Sun Hung Kai Financial Ltd unit, the person said, asking not to be identified before an announcement.
An acquisition would help Everbright bolster its presence in Hong Kong after the city implemented a trading link with Shanghai allowing foreigners to buy a net 13 billion yuan (US$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," Mr He said.
Haitong Securities Co, based in Shanghai, bought a majority stake in Hong Kong's Taifook Securities Co for US$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.
Shares Suspended The acquisition by Everbright Securities doesn't include Sun Hung Kai & Co's consumer-lending unit United Asia Finance Ltd, the person 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.
Sun Hung Kai & Co provides wealth management, securities brokerage and consumer finance in 180 locations across Hong Kong, Macau and China and posted a profit of HK$610.3 million (US$79 million) for the six months through June, according to company statements.