China Fund News Chenxi At the beginning of 2023, the wave of IPOs of small and medium-sized securities companies has become higher and higher.

Recently, Hualong Securities, an established regional securities firm, released a prospectus on the China Securities Regulatory Commission’s Information Disclosure Platform, officially joining the queue for an IPO.

The prospectus shows that Hualong Securities plans to list on the Shanghai Main Board this time, sponsored by CITIC Securities; it is expected to issue no more than 2 billion shares, accounting for no more than 24% of the total equity after the issuance.

All funds raised, after deducting issuance expenses, will be used to increase capital, supplement working capital, and be used for the development of various businesses.

In addition to the newly disclosed prospectus of Hualong Securities, Cinda Securities is in the issuance period and is about to become the first securities firm to list in A-shares in 2023.

Three companies, Kaiyuan Securities, Caixin Securities and Bohai Securities, have completed pre-disclosure updates and are at the forefront of the IPO queue.

In 2023, "waist brokers" may usher in a wave of listings.

The securities firm owned by the Gansu Provincial Government has issues left by minority shareholders that need to be resolved. As a securities firm located in the northwest, Hualong Securities may not be well-known enough, but its regional advantage of deeply cultivating the central and western regions cannot be underestimated.

The prospectus shows that Hualong Securities was established in April 2001 with a registered capital of 6.335 billion yuan. It is a comprehensive fully licensed securities operating institution.

As of the end of June 2022, Hualong Securities *** has 18 branches (5 in Gansu Province) and 79 business departments (35 in Gansu Province).

Hualong Securities has 5 holding subsidiaries and 6 associate and joint ventures.

The holding subsidiaries include private equity subsidiary Jincheng Capital, alternative subsidiaries Hualong Investment and Hualong Futures.

In addition, Hualong Securities also directly holds 46% of the equity of Huashang Fund and is the main sponsor of Huashang Fund.

Hualong Securities stated in the prospectus that as the only comprehensive securities operating institution controlled by the Gansu Provincial People's Government, it has received strong support from the local government and is ushering in policy opportunities and rapid development with the implementation of the national "Belt and Road" initiative.

During the period of historical opportunities, Gansu Province maintained its absolute advantage in the fierce market competition environment and played an increasingly important role in the western capital market.

It is worth mentioning that Qi Jianbang, the current chairman of Hualong Securities, is also the chairman of Gansu Financial Holding Group Co., Ltd. and will take up his new post in July 2021.

At the end of November 2022, Qi Jianbang stated that he would continue to deepen the reform of state-owned enterprises, further improve the governance system, optimize the layout structure and ownership structure, and fully promote the financial holding license and Hualong Securities IPO application.

In 2014, Hualong Securities initiated a shareholding restructuring and was transformed into a joint stock limited company.

In 2016, Hualong Securities was successfully listed on the New Third Board, and then delisted in August 2018, preparing to rush to the A-share listing.

In terms of sponsoring securities companies, Hualong Securities continued to choose CITIC Securities, the original sponsoring securities company when it was listed on the New Third Board, for this IPO to protect it.

The prospectus shows that as of the end of the reporting period, Hualong Securities had no controlling shareholder.

There are 5 shareholders*** holding more than 5% of the shares, among which Gansu Financial Holding Group Co., Ltd. ranks as the largest shareholder with a shareholding ratio of 16.29%.

In addition to Gansu Financial Holdings and its persons acting in concert, Hualong Securities’ shareholders holding more than 5% of the shares include Shandong State Investment Corporation, with a shareholding ratio of 7.89%.

The actual controller of Hualong Securities is the Gansu Provincial People's Government, which operates through Gansu Financial Holding, Gansu Aviation Tourism, Gansu State Investment, Gansu Electric Investment, Jiugang Group, Reader Media, Xinye Assets, Northwest Yongxin and Longshen Rongfa.

Holds and controls 38.94% shares of Hualong Securities.

Hualong Securities stated that its shareholders include well-known local state-owned enterprises inside and outside the province such as Gansu Financial Holdings, which is the state-owned financial capital investment, financing and management center of Gansu Province, and Shandong State Investment, the only provincial state-owned capital operating company in Shandong Province, as well as some

Well-known private enterprises with strong capital strength and market influence.

Through the listing on the New Third Board in 2016 and subsequent private placement, Hualong Securities has further diversified its ownership structure.

However, while the ownership structure is diversified, there are also certain flaws in the shareholder qualifications and share ownership of some shareholders of Hualong Securities.

As of the end of the reporting period, Hualong Securities *** had five legal person shareholders that did not meet regulatory requirements for shareholder qualifications of less than 5% of securities companies. The relevant companies had debt defaults, bankruptcy reorganization, bankruptcy liquidation, guarantee litigation, etc.

In terms of natural person shareholders, there are also problems with the equity held by some shareholders of Hualong Securities.

For example, a natural person shareholder of Hualong Securities who held 0.92% of the shares was sentenced to four years in prison for embezzlement of public funds and bribery, and his shareholdings were frozen due to involvement in criminal cases.

In view of the confidentiality of the case handling and other reasons, the specific nature of the relevant shares is not yet known.