Securities market rapidly transforming with M&As

Banks have emerged as key players in this wave, acquiring stakes in securities firms to diversify their portfolios and expand into capital markets. These moves are part of a broader trend of strategic repositioning, highlighting the growing importance of the securities sector and its potential for long-term growth.

Public Bank Vietnam exemplifies this trend with its plan to inject an additional approximately $34.6 million into its subsidiary in late October, Public Bank Securities Vietnam, raising the company’s charter capital to approximately $40 million.

Securities market rapidly transforming with M&As, photo: freepik.com

This follows the June approval by the State Securities Commission of Vietnam for the transfer of 100 per cent equity in Public Bank Securities Vietnam from Public Bank Vietnam to Malaysia’s RHB Bank. Within just four months of this ownership change, Public Bank Securities is set to receive substantial new capital, reflecting confidence in its growth prospects.

Similarly, HDBank has reinforced its position in the securities sector by acquiring a 30 per cent stake in HD Securities via a private share issuance in mid-2024. The bank invested around $26.3 million to purchase 43.8 million shares, enabling HD Securities to increase its charter capital to about $58.4 million.

”HDBank’s move reflects a broader trend among banks to integrate securities services into their ecosystems, leveraging synergies to enhance competitiveness,” the bank’s representative said.

Elsewhere, VPBank has pursued an even more aggressive strategy. After acquiring ASC Securities and rebranding it as VPBank Securities, in March this year, the bank has raised the firm’s charter capital to a record-breaking $600 million.

Particularly, the merger and acquisition (M&A) wave is not limited to major banks. Smaller securities firms have also attracted new ownership, often leading to dramatic restructuring and rebranding efforts.

In October, Malaysia’s Inter Pacific Securities sold its four million shares in Saigonbank Berjaya Securities (SBBS) to Nguyen Thi Huong Giang, who increased her stake to 60.19 per cent by acquiring an additional five million shares. Giang, a veteran investor and founder of the financial app Tititada, has driven a complete overhaul of SBBS, transforming its board and brand to align with her strategic vision.

At Haiphong Securities (Haseco), a similar transformation occurred after chairman Vu Duong Hien sold his entire 24.29 per cent stake and other executives followed suit. Two new investors, Tran Anh Duc and Vu Hoang Viet, emerged as key shareholders, holding 19.94 per cent and 24.87 per cent, respectively. In a surprising development, Ninh Le Son Hai, formerly an IT manager at Haseco, was appointed chairman.

Rebranding has become a hallmark of this transformative period. Royal International Securities was renamed UP Securities, introducing a refreshed brand identity and revamped digital platforms.

Viet Tin Securities followed suit, rebranding as VTG Securities and relocating its headquarters from Hanoi to Ho Chi Minh City after Singapore’s TIN Global acquired a 49 per cent stake.

Industry insiders believed that this surge in M&A activity is driven by regulatory constraints that have prevented the licensing of new securities firms for the past five years. As a result, existing firms, even those with underwhelming performance, have become attractive acquisition targets. Investors see these firms as strategic entry points into a market with significant growth potential.

“The inability to establish new securities firms has turned M&A into the primary pathway for market entry,” stated Kirin Capital.

Lam Van Van, a representative of ECI Capital, observed that the surge in M&A activity for small, inefficient securities firms reflects strategic considerations.

“Acquiring smaller firms is often more straightforward, particularly when the existing shareholders lack interest in further developing the company. For buyers, it provides an efficient route to formal ownership in a sector where new licences are no longer being issued,” he explained.

What is more, these acquisitions also align with broader strategic objectives.

Owning a securities firm can complement and strengthen the buyer’s existing ecosystem, especially by facilitating future capital-raising activities,” Van added. “In this context, the acquisition of small, underperforming securities firms is not only a practical solution to regulatory constraints but also a means to create synergies with existing business operations, positioning buyers advantageously in a competitive market.”

Kirin Capital predicted this trend will gain momentum, particularly if Vietnam’s stock market is upgraded from frontier to emerging market status.

“Foreign-owned securities firms, with their low capital costs and competitive fees, are highly attractive to investment funds,” Kirin Capital noted. “However, domestic firms will face heightened competition, necessitating innovation and operational improvements to maintain relevance.”

November circular set to ease access for foreign investors A new legal framework is set to enhance foreign investor access to Vietnam’s securities market, improve liquidity, and support a potential upgrade to emerging market status.