(Yicai Global) March 14 -- Soochow Securities and Zheshang Securities will both take part in the auction of a majority stake in highly profitable Minsheng Securities to further increase market share and business influence, the two Chinese brokerages said yesterday.

Some 3.471 billion shares in Minsheng Securities held by debt-stricken Oceanwide Holdings were put up for auction on e-commerce site JD.com’s judicial auction platform today at a starting price of CNY1.69 (USD0.30) per share, equivalent to CNY5.9 billion (USD860 million) for the whole stake.

The financial and real estate holding firm was ordered to auction off its holdings in Minsheng Securities on Feb. 2 by the Jinan Intermediate People’s Court in eastern Shandong province due to a contractual dispute with Yantai Shangaohonghao Investment Center.

Three buyers have registered for the auction, and it is very likely that, in addition to the two brokerages, a state-owned company based in Shanghai is also a participant, The Paper reported today. Both Soochow Securities and Zhejiang Securities are controlled by government bodies, namely the Suzhou Finance Bureau in eastern Jiangsu province and the People’s Government of Zhejiang Province, respectively.

Oceanwide’s stake is much sought after as Minsheng Securities has proved highly profitable in recent years. At present, only two firms own more than 5 percent of the brokerage. They are Beijing-based Oceanwide with a 31 percent stake and Shanghai Fengquanyu Enterprise Management with 13.4 percent.

Minsheng Securities logged a 33.1 percent jump in net profit in 2021 from the year before to CNY1.2 billion (USD174.7 million) and a 30.1 percent surge in revenue to CNY4.7 billion, according to Wind data. And in 2019, net profit soared more than five-and-a-half-fold year on year to CNY532 million (USD77 million) while revenue advanced 84.2 percent to CNY2.7 billion.

However, the auction might not go ahead as planned. Yesterday, a third party, Beijing Lion King Asset Management, raised an objection and applied to the Jinan court to suspend the sale of 200 million shares that Minsheng Securities had registered in its name. However, as of press time, the JD Auction website showed no change in the auction status.

Oceanwide, which started off as a real estate firm and then expanded aggressively into finance, energy and media, has been hemorrhaging cash due to a series of failed projects. As of July 2021, it had amassed CNY226.2 billion (USD32.9 billion) worth of debts. The company is being forced to sell assets to ease its tight cash flow.

Editor: Kim Taylor