Orient Securities (HKG:3958) has enough capital buffer to anchor its proposed acquisition of Shanghai Securities, S&P Global Ratings said in a recent release.
The company will issue A-share stocks to acquire 93.75% of its peer, with the remaining shares to be purchased by cash.
The company will maintain a risk-adjusted capital ratio of above 10% in the next one to two years, retaining strength even with a faster expansion in risky assets, S&P said.
The rating agency expects the company to further carry out ample risk management following the completion of the merger, which should face no significant transition risks.
The proposed purchase is a strategic move to boost the company's market position in China's fragmented securities sector, in line with regulatory efforts aiming at improving the brokerage sector's expertise, efficiency, and global competitiveness, S&P said.