The recent new regulations on reduction of holdings issued by the regulatory authorities have a profound impact on large-scale transactions. The restrictions on the number of large-scale reductions and the new “lock-up period” for the transferee have made the previous fast-in, fast-out, “short and fast” large transactions. Business is unsustainable, and investment institutions that rely on large-scale transactions are also facing an overall innovation in their business models.
Under the new regulations, institutions participating in the block trading of listed companies need to return to value investment, and “value-based block” requires investment institutions to work hard in the research of listed companies and the selection of market timings. “Block transactions will only be a business sector, and the investment team established behind it will be involved in diversified investment services around listed companies and major shareholders.” An agency official said.
Service thinking and business model transformation
The new regulations for shareholding reduction issued this time, for the “bridge reduction” through block transactions, clarified the requirements on the number of shareholding reductions and the holding period of the transferor and the transferee: the reduction of holdings by major shareholders or the reduction of holdings by specific shareholders shall be adopted. In the case of block transactions, within any consecutive 90 days, the total number of shares to be reduced shall not exceed 2% of the total number of shares of the company. The transferee shall not transfer the transferred shares within 6 months after the transfer.
As soon as the new regulations for reducing holdings came out, investment institutions involved in large transactions had mixed reactions. “Investment institutions specializing in large-scale transactions are mainly to bridge for large-scale holding reductions, including the need for major shareholders of listed companies to lock in their holding reduction acceptance orders in advance, and the need to achieve tax reduction and tax avoidance through large-scale transactions. It should be said that large-scale transaction investment institutions are The role of an intermediary broker, and make this role into a business. The intermediary broker will naturally not store goods for a long time in their hands, the capital situation is not allowed, and the risk control is not allowed.” The person in charge of a large-scale transaction investment institution in Shanghai said that from this From the perspective of this, many large-scale trading institutions will die after the introduction of the new regulations. In fact, many institutions are indeed “closing their doors and resting”.
Of course, there are also institutions that “take it easy” in the face of the new regulations for reducing holdings. An investment institution in Shanghai said that the company just took advantage of the new regulations to reduce its holdings to achieve business transformation. “Purely large-scale transactions have become more and more difficult in recent years, especially as more and more institutions are involved, and the competition for purely large-scale transactions will increase. The income level has also declined to a certain extent. This time, taking advantage of the timing of the introduction of the new policy, the company is planning innovative businesses, and the block transaction business will continue to be done, and it will be more refined and value-oriented, and block transactions will be one of them. It connects the other needs of listed companies and major shareholders.” But such a transformation requires considerable investment, and for investment institutions, it is even more necessary to fundamentally change service thinking and business models.
New regulations promote the differentiation of investment institutions
Shenwan Hongyuan believes that after the introduction of the new regulations on shareholding reduction, it will have a certain emotional impact on the market in the short term. The increase in the threshold for reducing holdings and the slower pace are conducive to stabilizing investors’ investment confidence in the secondary market and paying more attention to the company’s own quality and long-term growth. The implementation of the new regulations has far-reaching and practical significance for stabilizing the market operation, encouraging long-term investment, improving the market mechanism for reasonable investment, and enhancing the focus of listed companies on the main business. The secondary market will be driven by a more reasonable growth logic, enabling listed companies to achieve a reasonable valuation level, and truly sustainable and high-quality companies will stand out and gain the favor and trust of rational investors.
Similarly, investment institutions participating in block transactions of listed companies will also be differentiated under the promotion of the new regulations. In the medium and long term, investment institutions will look for investment opportunities in the block transactions of listed companies that have both short-term speculation and long-term value. It is reported that some investment institutions have already organized teams to develop new models of block transactions under the lock-up period. In the above new models, the original factors of “speculative” block transactions are being raised by the new growth, value and other new factors brought about by block transactions. Elements are replaced, and future large-scale transaction investment will be a competition of institutional value mining capabilities.
