M&A of listed companies gaining steam (4)

Vast space for merger and acquisition business

"Security companies of China fail to attach enough importance to merger and acquisition business and most security companies focus on underwriting and issuing for listed companies, brokerage, assets management and principal investment." Zhang Yun from Sinolink Securities says that the few security companies setting up special merger and acquisition department and dealing with merger and acquisition business do not only invest limited manpower and money, but also offer unsatisfactory service for merger and acquisition business such as consultation and planning. Generally speaking, Security companies are weak relatively in the merger and acquisition business and are short in merger and acquisition talents.

Insider says that development of merger and acquisition business in security companies is of important economic and social benefit both in improving the current income structure in the security industry and promoting industrial structural adjustment, optimization and upgrading.

It is known that if a security company is involved in merger and acquisition business, it will offer services like underwriting the securities of the merged and acquired enterprise and providing short-term debit for merger and acquisition, besides intermediary service such as selecting target enterprise, evaluating target enterprise and formulating the financing plan. "Under such a condition, security company should recognize and control risks in market, credit and operation and set up a complete risk management recognition and measurement system," said by Yi Hao from Sinolink Securities.

Furthermore, Yan Jianlin from CITIC Securities views that on the background of economic growth and industrial structural adjustment, merger and acquisition fund will become an important participant in the Chinese merger and acquisition market.

"Presently, China enjoys a vast merger and acquisition market space and is also faced with a huge financing gap for merger and acquisition." Yan Jianlin says that if the proportion of merger and acquisition of listed companies keeps the level in 2011, there will be a financing gap of about RMB 250 billion yuan each year for merger and acquisition only in the merger and acquisition market of listed companies. However, there are still not so many financing methods in the merger and acquisition market of China. "According to the experience from the developed countries, merger and acquisition fund, concentrating the decentralized fund relying on a mature and established operation system, can be a power supplement to the merger and acquisition financing in China. In spite of many restrictions for the development of the merger and acquisition fund in China, the market environment for merger and acquisition fund has been mature in recent years."

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