When Ant Group's "Epic" Acquisition Meets Hong Kong Stock IPO Boom, How Will Yaotech Securities' Business Unfold?

Recently, Yao Cai Securities Finance (01428.HK) announced that the tender offer for Ant Group has been approved by relevant Chinese authorities. This HKD 2.814 billion acquisition completes a key piece of Ant Group’s financial map—obtaining a securities license.

This acquisition comes amid a booming Hong Kong IPO market. Margin financing (which can be understood as margin trading or financing for IPO subscriptions) is an important way for Yao Cai Securities to participate in Hong Kong IPOs. According to LiveReport’s 2025 Hong Kong IPO intermediary rankings, Yao Cai Securities ranked 6th in margin broker participation, with involvement in 73 IPOs and a total of HKD 265.8 billion in funds.

Cheng Fengchao, President of the Zhongguancun Guorui Financial and Industry Development Research Association, told Caixin: “With a fundamental change in client sources, digital and standardized IPO services, and potential restructuring of investment banking models, this acquisition will bring structural improvements to Yao Cai Securities’ IPO-related business, rather than just simple expansion.”

A rapidly rising financial giant in China’s internet era and a local broker that has accompanied Hong Kong’s stock market growth for over 30 years. Jin Youfang, Deputy Director of the Institute of Economic Law at Zhejiang University of Technology, pointed out: “The Hong Kong Securities and Futures Commission (SFC) enforces strict cross-border regulation on brokers, client assets, and data. Mainland China also has strict red lines on cross-border finance. Compliance and regulation are the biggest risks they will face in the future.”

What is Yao Cai Securities’ background?

Recently, Yao Cai Securities Finance announced that the Ant Group’s tender offer has been approved by Chinese authorities, with completion expected by March 30. This means the most critical part of the acquisition has now been settled.

Looking back, on April 25, 2025, Ant Group, through its subsidiary Shanghai Yunjin Information Technology Co., Ltd. (later called “Shanghai Yunjin”), made a tender offer to Yao Cai Securities at HKD 3.28 per share. The plan aimed to acquire about 50.55% of Yao Cai Securities’ total shares, totaling HKD 2.814 billion. Notably, Shanghai Yunjin is also a shareholder of the internet wealth management platform “Ant Fortune”.

Yao Cai Securities is a well-established local broker in Hong Kong, founded by Ye Maolin in 1995. In 2003, by pioneering lower commissions, it became a “price leader” and accumulated a large retail client base. By the time the tender offer was announced in 2025, Yao Cai Securities held licenses for Hong Kong’s SFC Type 1, 2, 3, 4, 5, 7, and 9 activities, covering Hong Kong stocks, US stocks, Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect, margin trading, and futures.

Yao Cai Securities License Overview

However, for brokers’ own development, low commissions are a double-edged sword. As the industry enters a “new commission” era—under the background of “price-to-volume” competition—Yao Cai Securities’ client advantage is not particularly prominent.

After earning HKD 794 million in brokerage commissions in FY2021, commissions declined to HKD 599.8 million, HKD 446 million, and HKD 511 million in FY2022 to FY2025. In August 2025, Yao Cai Securities’ CEO Xu Yibin told the media that the commission war posed a threat to brokers’ profit models.

According to FY2025 data, among Yao Cai Securities’ revenue streams, interest income from margin financing related to IPOs accounts for 34.9%, making it the second-largest revenue source after brokerage commissions.

“Margin,” in English, refers to “margin,” i.e., collateral or leverage. Margin financing can be understood as margin trading or financing for IPO subscriptions. In Hong Kong’s IPO participation process, banks and securities firms generally provide financing services with collateral. Investors opening “margin accounts” for leveraged IPOs can increase their chances of winning allocations.

IPO-related business is expected to further boost

Since the beginning of 2026, the Hong Kong IPO market has experienced explosive growth. Star companies like Biren Technology (06082.HK), Mingming Very Busy (01768.HK), and others have listed in Hong Kong. GigaDevice (603986.SH), Dongpeng Beverage (605499.SH), and Muyuan Foods (002714.SZ) have begun their “A+H” stock layout. As of March 19, there have been 29 new listings in Hong Kong this year, raising a total of HKD 86.155 billion; another 390 companies are queued up, ready to go.

Interest income from margin financing mainly depends on the financing balance and interest rates. With the IPO market booming, how will Yao Cai Securities’ key revenue source—margin business—develop?

Chen Haoyang, Chairman of Litan Investment, told Caixin: “After Ant Group’s acquisition, Yao Cai Securities may have advantages in attracting clients, expanding the customer base, reducing financing costs, and enlarging financing scale—using internet big data to more precisely identify clients and risks, and evolving Hong Kong’s local margin accounts into more convenient internet financial products.”

Jin Youfang said, “Yao Cai Securities already has mature margin business, and Ant has capital and risk control technology. Post-merger, financing capacity will be more sufficient, interest rates more competitive, and systems more stable, helping attract more leveraged IPO participants. The scale and income of margin business are expected to grow.”

According to FY2025 annual report, besides margin business, Yao Cai Securities’ IPO chain layout already includes IPO brokerage services and financing interest income from IPOs.

Jin Youfang further pointed out that Ant’s large user base and traffic, combined with Yao Cai’s full licenses in Hong Kong, will greatly expand IPO channels, making it easier for Southbound funds and mainland retail investors to participate in Hong Kong IPOs.

Looking ahead, Cheng Fengchao said that Ant Group will bring structural improvements to Yao Cai Securities’ IPO-related business, rather than just simple expansion. “Future investment banking at brokers will no longer be project-based but will resemble an ‘IPO + financing ecosystem platform’ for matchmaking. Ant’s platform will help Yao Cai Securities provide full lifecycle services.”

Regulatory and compliance risks cannot be ignored

Beyond IPO-related business, Cheng Fengchao summarized the overall impact of this acquisition as a “deep integration of digital platforms and traditional licensed financial institutions.”

He pointed out that this is a key leap for Ant from a “platform technology company” to a “global comprehensive financial service provider”. In the past, Ant relied on its payment and wealth management platforms to accumulate a large user base and data advantages, but it still had shortcomings in cross-border securities business and complete licensing systems. This acquisition of Yao Cai Securities essentially completes a critical piece of its compliance capabilities.

“This is a ‘value re-creation’ for traditional brokers,” Cheng said. Yao Cai Securities originally had a solid client base and license resources, but there was room for improvement in digital capabilities, user operations, and technology platforms. Ant’s entry essentially helps upgrade its client structure—from regional to global users, with digital and intelligent trading experiences, and a platform-based, ecosystem-driven business model.

Furthermore, Cheng believes this acquisition is a microcosm of Hong Kong’s “digital financial infrastructure reconstruction.” In the future, brokers’ core competitiveness will shift from “channels + licenses” to “data + technology + ecosystems.”

While the market remains optimistic, hidden risks must also be considered.

Regulatory and compliance risks are foremost. Jin Youfang warned: “HK SFC enforces strict cross-border regulation on brokers, client assets, and data. Mainland China also has strict red lines on cross-border finance. Compliance and regulation are the biggest risks they will face in the future.”

Cheng Fengchao also emphasized that regulatory and compliance risks are the most critical. “If Hong Kong and mainland regulations, cross-border data flow, anti-money laundering, and investor protection are mishandled, it could impact business expansion.”

He further noted that the emphasis on efficiency and innovation by tech companies versus compliance and risk control by brokers requires time to harmonize in incentive mechanisms and decision-making processes.

“The story of ‘technology + finance’ is promising, but actual implementation still faces challenges such as customer conversion, profit model clarity, and the balance between costs and returns,” Cheng said.

Jin Youfang added, “Hong Kong IPOs are highly volatile; during downturns, business declines. This acquisition’s premium is high, and if performance doesn’t keep up, it could drag down returns.” On March 17, when Yao Cai Securities resumed trading, the stock price peaked at HKD 16.88 per share, but by March 19, it had fallen for three consecutive days, closing at HKD 12.6.