Brokerage firms’ “chip” treasure

The IPO boom in AI tech stocks has given securities firms an extra stash of “treasures.”

Much of this is still not well understood by the outside world.

On the cover of the latest prospectus intent document released by Changxin Technology, six securities firms—CICC, China Securities Jianxing, Guotai Huarong, Guoyuan Securities, Huatai United, and China Merchants Securities—appear on the cover respectively in the roles of sponsor and underwriter.

But the securities firms that truly benefit are not only on the cover, but deep within the hundreds of pages of the shareholder register. As Changxin Technology’s issuance process continues to move forward, those long-standing shareholders who once participated in funding this company may be poised to receive very high capital appreciation—among them, many institutions affiliated with securities firms.

For securities firms with a “nose” for opportunities, the listing of a leading tech company is not a routine IPO project, but could be a multi-layered payoff jointly composed of PE unrealized gains, sponsor follow-on participation returns, underwriting and sponsorship revenue, fund management fees, performance fees, and more.

This tally is truly crucial.

“Invisible” shareholders biding time for the long term

Securities firms currently hold shares in Changxin Technology at least in two ways.

One is project-level shareholding—for example, entities such as 招证投资 (Zhanzheng Investment), 中安招商基金 (Anzong Fund), 海通徽银 (Haitong Huibin), and 大基金二期 (Phase II of the Big Fund) are directly registered as proportions in the shareholder register of Changxin Technology.

The other is the securities firm’s shareholding proportion after look-through, meaning that after deducting the portion held by other fund contributors, the portion that truly belongs to the securities firm is what is attributed.

For example, the Big Fund Phase II and Anhua Innovation jointly hold about 9.48% of Changxin Technology, but according to a research note from 广发证券 (GF Securities), the economic interest of Huaxin Securities in Changxin Technology after look-through is about 0.439%, because the latter indirectly holds some industrial funds through subsidiaries, and those industrial funds hold Changxin Technology.

Source of attached image: 广发证券 research report

In terms of absolute economic interest, China Merchants Securities is currently the clearest number-one beneficiary.

China Merchants Securities’ wholly owned subsidiary, 招证投资, directly holds about 0.54% of Changxin Technology; in addition, China Merchants Securities’ private equity platform also participates through two routes: 中安招商基金 (Anzong Fund) and 安徽交控 (Anhui Jiaokong). According to GF Securities’ calculations, China Merchants Securities’ total look-through holding is about 0.841%.

Huaxin Securities, however, is easier to overlook. Although it is not the sponsor or underwriter for Changxin Technology, through industrial capital routes such as the Big Fund Phase II and Anhua Innovation, Huaxin Securities’ look-through interest is about 0.439%, only second to China Merchants Securities.

China Securities Jianxing and Guotai Huarong fall into the second tier. Guoyuan Securities’ project-level shareholding ratio appears relatively high, but most of the capital comes from other fund contributors, and the proportion that penetrates into the listed securities firm is significantly narrower. CICC’s situation is similar: the prospectus cites 0.32%, which mainly falls under the related-fund and interest-relationship framework; if further looked through to the securities firm’s own capital, GF Securities estimates it to be only about 0.006%. These two figures are not contradictory.

How much profit can listing bring?

Changxin Technology plans to use 29.5 billion yuan in募集资金 (proceeds). If the final amount raised is exactly 29.5B元 (29.5 billion yuan), and the initial number of shares issued remains 6.69B shares, then the implied issue price is about 4.41 yuan per share, corresponding to a post-issue market value of about 295B元 (295 billion yuan), and a pre-issue valuation of about 265.5B元 (265.5 billion yuan).

This valuation anchor shows a clear pricing gap compared with Changxin Technology’s previous several rounds of financing and equity transfer prices.

The prospectus shows that in 2023, the equity transfer price was about 2.22 yuan per share; in 2024, the capital increase price was roughly 2.61 yuan per share; in 2025, Guangzhou Xinde’s transfer price was about 2.60 yuan per share, and the participation capital increase prices for Alibaba Cloud Computing and others were about 2.63 yuan per share. Using the most recent round at about 2.63 yuan per share as the reference, the implied issue price of 4.41 yuan suggests nearly 68% book appreciation room; compared with 2023’s 2.22 yuan, the valuation increase is close to double.

Assuming the composite cost of the portions held by the relevant securities firms is close to the most recent financing price of 2.63 yuan, then the potential appreciation corresponding to an increase from 2.63 yuan to 4.41 yuan is also 68%.

Of course, that doesn’t mean all of this appreciation will be fully recorded in the securities firms’ net profit in the listing period.

First, the actual time of investment, cost, and fund shareholdings differ across investment entities; second, some equity may have already undergone fair value remeasurement prior to listing based on the latest financing prices; third, different financial assets may be recognized separately in current-period profit or in other comprehensive income. If the funds are included in the consolidation scope, then minority shareholder profit attributable to other fund contributors must also be deducted.

Securities firms’ profit sources are diverse

Changxin Technology’s project disclosure reveals that the core sources of securities firms’收益 (returns) under the “investing + investment banking (IB)” model are central: for the same company, securities firms can repeatedly realize value across different stages.

In the early stage, by taking stakes as a PE, an industrial fund, or an alternative investment subsidiary, the first profit earned is a one-time increase in valuation in the primary market. If the entry price is between 2 and 3 yuan, and the IPO pricing anchor rises to above 4 yuan, then a round of valuation gains has already been formed before listing; after listing, if the secondary market continues to rise, existing shareholders can still share in the second round of price upside.

This return model can be divided into two types.

The first is direct shareholding with own capital. For instance, 招证投资 directly holds about 0.54% of Changxin Technology; the equity appreciation is therefore more directly linked to China Merchants Securities’ economic interests.

The second is securities firms’ private fund subsidiaries acting as GP or fund managers. Under this model, securities firms may not only share project returns as an LP or co-investor using their own capital, but can also charge management fees, and after the project exit reaches the agreed threshold, obtain performance fees/performance carry (业绩报酬).

This also means that when a fund holds Changxin Technology with a market value of 1 billion yuan, it does not mean the securities firm can earn 1 billion yuan in profit; however, the securities firm’s final revenue is not limited to its own capital contribution ratio—it may also include management fees and performance fees. Its returns depend on the fund contract, capital contribution structure, exit prices, and the arrangement for distributing returns.

China Securities Jianxing’s research indicates that securities firms’ returns from their STAR Market (科创板) business have expanded beyond traditional underwriting income, reaching sponsor follow-on participation, direct investment exit returns, and private equity carry (profit share).

Existing PE shares are also subject to lock-up periods. The lock-up periods for different shareholders in Changxin Technology are not fully identical. Most related existing shares are locked up for at least 12 months, and some shareholders commit to 36 months. Therefore, what listing first brings is observable market price and book value; for real cash exit gains, it still needs to wait until the restricted period expires and the shares are sold down.

Potential profits from additional bets afterward

Besides existing shareholders that already hold shares, institutions that can obtain additional shares during the offering period also increase the possibility of additional profits.

For this offering of Changxin Technology, the additional bets already identified are related subsidiaries of two joint sponsors.

According to the prospectus, the initial strategic placement quantities for CICC Wealth and China Securities Jianxing Investment are both 133.76 million shares, each accounting for 2% of the initial number of shares offered. The subscription amounts are each not more than 1B yuan, and the allotted shares are locked up for 24 months.

Based on a total fund-raising scale of 29.5 billion yuan, the initial investment by the two follow-on entities is each about 590 million yuan. Because follow-on participation prices are generally the IPO issue price, this portion of capital cannot enjoy the pre-listing valuation uplift; the returns depend entirely on the post-listing share price performance.

This is also the two-sided nature of the sponsor follow-on participation制度: when prices rise, it can significantly enhance investment returns; when prices fall, it can also lead to fair value losses and capital occupation. Meanwhile, the 24-month lock-up period means that even if there is a large unrealized gain early after listing, it cannot be realized immediately.

As for whether other securities firms will continue to add positions through offline placements or other strategic placements, it remains to be seen and will require further disclosure in the price inquiry and allocation announcements.

Underwriting fees are “clearly stated,” but may not be the source of upside

Besides holding gains, the six underwriting institutions will also receive sponsor- and underwriting-related revenue.

According to the arrangement of offering expenses, if Changxin Technology’s actual proceeds do not exceed 29.5B元, the sponsor and underwriting fee equals (0.66% of the total proceeds) divided by 1.06. Based on 29.5B元, the entire underwriting syndicate’s pre-tax sponsor and underwriting fee is about 184 million yuan, shared by CICC, China Securities Jianxing, Guotai Huarong, Guoyuan Securities, Huatai United, and China Merchants Securities together; the specific distribution ratios are not disclosed.

Compared with the equity investment’s interest value corresponding to several billions yuan or even tens of billions yuan, underwriting fees are more certain, but may not be the most flexible income source for this project.

GF Securities research shows that as of June 30, 2026, the STAR Market follow-on unrealized gains across the securities industry are about 6.6 billion yuan, and they are mainly concentrated among a handful of top-tier securities firms, led significantly by CITIC Securities, Guotai Huarong, China Securities Jianxing, and CICC.

Data on follow-on participation in dual-innovation IPOs compiled earlier by China Securities Jianxing also indicates that for some securities firms, their follow-on unrealized gains as a proportion of their annual net profit have reached relatively high levels.

Once the capital markets enter a phase of dense listings by technology enterprises and a rebound in secondary market valuations, the drivers of securities firms’ performance are no longer only deal volume and commissions; they also include primary investments, follow-on participation, and exit returns.

Everything still depends on the stock price performance after listing

Based on the currently disclosed information, the benefit paths for different securities firms vary.

But the core premise is that the mid-term share price performance of Changxin Technology after it lists. It likely won’t be the same as the hot attention at the very beginning of listing, but more easily reflects long-term valuation after the market cools down.

And to some extent, it also depends on how Changxin Technology’s main business performs in the next one or two years.

So, past participation in shareholding may reflect the “vision” of decision-makers at that time; but what is always more critical is the fundamentals.

Risk disclosure and disclaimer

        The market is risky; investment requires caution. This article does not constitute personal investment advice, and it does not consider the specific investment goals, financial conditions, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article align with their specific circumstances. Investing based on this is at your own risk.