The Research About The Equity Financing Patterns Of Securities Companies

Background and significanceHaving developed for more than 20 years,at the end of 2011 there were 109 securities companies in China.The funds shortage has been a main constraint of their development.Equity financing can raise long-term and stable capital,which benefits their competitiveness and risk controlling greatly.The research on equity financing of securities companies is of great significance.Main content and perspectivesFrom the listed securities companies,there are three modes of their equity financing.The first one is that a listed company transformed to become a securities company,and Hong Yuan Securities as represented.This pattern has advantages like simple operation,low cost,small risk.It can't raise funds immediately or has great historical limitations.The second one is the initial public offering(IPO),as the representative of CITIC Securities.The IPO mode which can raise huge amounts of money helps the company expand its reputation,promote its standardized operation,continue to finance.It costs higher and is more difficult.The IPO is suit for securities companies which operate standardized and have better profitability.The third pattern is the backdoor listing,as the representative of the Hai Tong Securities.On this pattern,securities companies can lead the process with less strict performance.Their follow-up financing have to wait until they have listed and the refinancing was hard to get the recognition in the market.Backdoor listing involving wider parties brings a large number of hidden costs which makes it risky and difficult.In addition,the backdoor listing need to concern about the market in order to control the backdoor costs and should prevent insider trading.When securities companies could not meet the IPO conditions in poor market,the backdoor listing would a better choice.As China's capital market is maturing,backdoor listing is faced with two prospects.Backdoor listing companies must also meet certain conditions,or it would not allow the sale of shell resources.These indicate that the backdoor listing will gradually disappear and the IPO will be the only-one choice.Preparations for IPO securities companies proposed to do the followings:promote standardized operation and management;improve business profitability;strengthen corporate governance;improve the information disclosure system;select the sponsors with higher quality;ensure returns to shareholders;determine the IPO price and the amount of funds raised prudently.Main contribution and deficienciesThis paper has analyzed three typical equity financing modes of the listed securities companies.On this basis,combined with the current policy background,this paper thought the securities companies should choose the IPO pattern and have given the preparatory recommendations that can provide a reference for a large number of securities companies not yet listed.However,the limited materials of this study lead the limitations of the conclusions.Having less theoretical study of the equity financing for-a securities company,we cannot provide a solid theoretical basis for the analysis,but only to draw general conclusions.In addition,many key details of the IPO and backdoor listing did not disclose which caused the analysis was inadequate.