Recently, a fixed increase announcement of Tris, a new third board enterprise, attracted market attention.
In this fixed increase, teres sponsored China Securities Co.Ltd(601066) as an alternative investment subsidiary of China Securities Co.Ltd(601066) securities. According to the attached agreement, if the IPO materials of teres’s Beijing stock exchange are not accepted before December 31, 2022, the shareholders of the company need to buy back the fixed increase shares held by China Securities Co.Ltd(601066) investment with compensation interest. At the end of last year, teres has submitted the guidance report on listing on the Beijing stock exchange, and the guidance institution is China Securities Co.Ltd(601066) securities.
Investment banking + investment the first mock exam is becoming more common. The reporter of the Securities Times noted that in fact, China Securities Co.Ltd(601066) is not the only one, Soochow Securities Co.Ltd(601555) , Donghai securities and other securities companies have also had similar cases. Senior investment bankers said that this phenomenon is relatively common. There are many follow-up investment agreements on the science and innovation board, but at that time, the enterprises had not been listed and did not need to be announced, while the enterprises listed on the new third board had to be announced, so it was easy to be seen by the market.
sponsor + investment + gambling
Teres issued 3.92 million additional shares, of which China Securities Co.Ltd(601066) invested 2.42 million shares.
Teres announced that the issuance object China Securities Co.Ltd(601066) investment is the company’s continuous supervision of the sponsor’s China Securities Co.Ltd(601066) securities alternative investment subsidiary. According to the terms of the attached agreement, China Securities Co.Ltd(601066) investment and the shareholders of the company jointly set the business goal for the company: from the date of signing the contract, the company will submit the IPO application to the North stock exchange before December 31, 2022 and obtain formal acceptance.
If the above objectives are not achieved, China Securities Co.Ltd(601066) investment has the right to require the shareholders of the company to repurchase all or part of the equity of the company held by China Securities Co.Ltd(601066) investment in this offering at the price agreed in the terms in the form of a written notice (hereinafter referred to as the “repurchase notice”). The written notice will come into force as soon as it is issued. In addition to the right to claim repurchase, China Securities Co.Ltd(601066) investment also has the right to require tress shareholders to make joint payment after calculating the investment income during the actual occupation of funds at the annualized interest rate of 8% based on the subscription amount.
The announcement also said that the supplementary agreement will be automatically suspended after the company submits the IPO guidance acceptance application to the local CSRC agency and obtains the no objection letter. If the company’s IPO application is not accepted, deliberated or withdrawn, invalid, terminated, rejected or not registered by the Beijing stock exchange for any reason, this supplementary agreement will automatically resume its effectiveness. This supplementary agreement is automatically terminated and invalid from the beginning without any recovery clause since the company has passed the deliberation of the Shanghai municipal Party committee of the Beijing stock exchange and completed the registration procedure of the CSRC.
Relevant persons involved in securities companies told the securities times, “from the perspective of actual business development and external regulations, the design of gambling terms does not violate the regulatory requirements, and it is the choice of the invested enterprises and investors in business negotiations.”
“The core of the terms is to promote enterprises to report to the Beijing stock exchange, which is not a traditional bet linked to the success of performance or listing application.” These people said.
gambling is not uncommon
Securities Times reporter noted that for the new third board enterprises, the phenomenon of gambling is not rare, nor is it China Securities Co.Ltd(601066) unique. Since last year, at least three similar cases have occurred in securities companies, including Soochow Securities Co.Ltd(601555) and Donghai securities.
On March 25, 2021, heshunxing dingzeng, Soochow Securities Co.Ltd(601555) took shares as the host broker, with gambling terms attached – the enterprise should complete the public offering and enter the selection layer before May 1, 2022; On December 15, 2021, xuedingzeng in Taihu Lake, with Soochow Securities Co.Ltd(601555) as the host broker and Soochow Securities Co.Ltd(601555) as the shareholder. The gambling terms are that the company applies for IPO materials at the end of 2023 or goes public at the end of 2024; In 2022, tisbo will increase its shares and Donghai securities will invest in innovation investment. Donghai securities is the host securities company. The former is the alternative investment subsidiary of the latter. The gambling terms are that the company will be listed before December 31, 2024.
For the enterprises to be IPO by the Beijing stock exchange, the shares of the sponsor are in line with the regulations. At the end of November last year, the guidelines for the application of regulatory rules – institution No. 1 (revised in November 2021) issued by the CSRC stipulated that, “If the issuer intends to make a public offering and be listed on the Beijing stock exchange, before and after the recommendation institution provides the recommendation service to the issuer, the recommendation institution or the securities company holding the recommendation institution and the relevant subsidiaries of the above-mentioned institution can invest in the issuer.”
As for the compliance of the gambling terms, a relevant person told the securities times that the design of the terms did not violate the regulatory provisions.
Senior investment bankers also said that gambling is common. Most of the investment and innovation institutions can follow the recommendation board in the process. However, these Sci-tech Innovation Board enterprises were not listed at that time, so there was no need to make an announcement. Of course, they were not familiar to investors. It is easy to see the emergence of gambling cases on the new third board in the market because the enterprises listed on the new third board need to announce relevant matters, and the fixed increase is a major matter.
According to the provisions of the answers to some questions on initial business issued by the CSRC, if an investment institution agrees on a gambling agreement and other similar arrangements when investing in an issuer, in principle, it requires the issuer to clean up before declaration, but if it meets the following requirements at the same time, it may not be cleaned up: first, the issuer does not act as a party to the gambling agreement; Second, there is no agreement in the gambling agreement that may lead to the change of the company’s control; Third, the gambling agreement is not linked to the market value; Fourth, the gambling agreement does not have any situation that seriously affects the issuer’s ability to continue operation or other situations that seriously affect the rights and interests of investors.
“Some gambling clauses require cancellation before declaration, but they can’t be generalized.” A senior investment banker said.
sponsor + investment income
Investment + recommendation: on the one hand, securities companies can obtain investment income, on the other hand, they can also obtain income from underwriting and recommendation. The practice of Kechuang board shows that the investment income of securities companies is quite abundant.
According to Zhu Haibin team of Anxin securities, the cumulative income of securities companies’ direct investment in the science and Innovation Board reached 149%. As of January this year, securities companies have followed the investment of the science and innovation board for a total of 386 times, with a total allocated investment of RMB 18.442 billion, realizing a floating profit of RMB 27.487 billion, with an average floating profit of RMB 71.2 million, and the overall income of follow-up investment reached 149%. Underwriting recommendation fees totaled 26.583 billion yuan, with an average value of 70.5 million yuan.
In addition, the concentration of the top ten securities companies in the follow-up investment market is as high as 60%, of which the total follow-up investment times of the top ten securities companies account for 63.7%. The highest are Citic Securities Company Limited(600030) , Huatai Securities Co.Ltd(601688) , China Securities Co.Ltd(601066) securities; The top ten of follow-up investment income accounted for 74.0%, and the highest were Citic Securities Company Limited(600030) , Haitong Securities Company Limited(600837) and CICC wealth, reaching 3.79 billion yuan, 3.29 billion yuan and 3.21 billion yuan respectively.
Beijing stock exchange can also adopt the mode of “sponsor first and then direct investment”. Zhu Haibin said that this move can enhance the profitability of securities companies, untie their shareholding restrictions, and enhance their enthusiasm to participate in the fixed growth, market making and direct investment of the new third board. The direct investment of the Beijing stock exchange is expected to become a new growth point of securities companies’ investment banking, proprietary trading, direct investment and other businesses in the future. At the same time, securities companies can also “move forward” the direct investment, focusing on pre listing investment opportunities and reducing investment costs.
