Caixin
Oct 13, 2021 08:01 PM
FINANCE

Sinopec to Sell Stake in Brokerage Owned by Fallen Private Equity Star

What’s new: China Petrochemical Corp. (Sinopec Group) is offloading its 10.98% stake in JZ Securities Co. Ltd., a small brokerage whose disgraced actual controller has been on the hunt for new shareholders since 2017.

Sinopec Group, which bought the holding in 2017 for 407 million yuan ($63 million), put the shares up for sale on the China Beijing Equity Exchange at a reserve price of 474 million yuan, according to an announcement (link in Chinese) on Wednesday, 16.5% more than it paid for the stake. Out of the 102 brokerages ranked by the Securities Association of China (link in Chinese), JZ Securities ranked 91st in terms of revenue and 73rd in terms of net profit in 2020.

The background: Amid a sweeping campaign by the Chinese authorities to crack down on market irregularities, JZ Securities’ biggest shareholder, private equity firm Tongchuang Jiuding Investment Management Group Co. Ltd. (Jiuding Group), was investigated and fined 600,000 yuan by China’s securities regulator for violations of the securities law, according to an announcement in January. Jiuding Group is traded on the National Equities Exchange and Quotations, an over-the-counter market.

Wu Gang, founder and chairman of Jiuding Group, was put under investigation (link in Chinese) in September for alleged violations of investment fund-related laws and regulations.

Jiuding Group bought a 51% stake in JZ Securities, then TeemRise Securities Co. Ltd., in 2015 and bought the rest of the company a year later. The group planned to inject 30 billion yuan into the brokerage by bringing in several new shareholders, but only Sinopec Group’s 2017 purchase of a 10.98% stake in the firm as part of that plan obtained the regulatory greenlight. Under regulatory pressure, Jiuding Group decided to sell JZ Securities, but so far no deal has been reached.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.

Contact reporter Zhang Yukun (yukunzhang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)

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