This article only represents the author's own views.
Another day, another privatization bid for a Hong Kong-listed Chinese company that failed to garner much investor interest with its China-going-global story. This time it’s Haitong International Holdings Ltd. (0665.HK), whose parent, Chinese brokerage Haitong Securities (6837.HK; 600837.SH), has offered to privatize its international offspring with an offer that’s more than double the stock’s previous closing price. While the move has raised expectation for similar privatizations of Chinese securities firms, it may actually reflect Haitong’s ongoing campaign to strengthen its corporate governance and simplify its structure.
Haitong Securities made its bid through a “scheme of arrangement,” which requires a “yes” vote from at least 75% of holders of shares with no connection to the Haitong family. At the same time, “no” votes may not exceed 10% of such disinterested shareholders who cast ballots. Those thresholds, which are lower than those for a general offer, coupled with other earlier steps by Haitong International, are expected to give the offer a better chance of success.