China Industrial Securities International Announces Discloseable Transaction: Acquisition of Lloyds Banking Group Perpetual Securities

Key Highlights

• Acquisition of Perpetual Securities: China Industrial Securities International Financial Group Limited (“CISI”, Stock Code: 6058) has disclosed that its indirect wholly-owned subsidiary, CISI Investment Limited, acquired US\$13,000,000 in aggregate principal amount of perpetual subordinated contingent convertible securities issued by Lloyds Banking Group plc.
• Total Consideration: The total purchase price for these securities was approximately US\$14,222,306 (equivalent to about HK\$111,645,099), acquired through open market transactions conducted between 28 January 2026 and 18 March 2026.
• Issuer Details: The issuer of the securities, Lloyds Banking Group plc, is a major publicly listed bank in the UK, with shares traded on the London Stock Exchange and ADRs on the NYSE under the symbol “LYG”.
• Security Features: The perpetual securities have a fixed interest rate of 8% per annum, and were issued at par (100% of principal). The total size of the securities issue by Lloyds is US\$1.25 billion.
• Listing Rules Implications: While the acquisition by itself did not cross major thresholds, once aggregated with previous acquisitions of the same security, one of the applicable percentage ratios under the Hong Kong Listing Rules exceeds 5% (but is less than 25%). Thus, the transaction is classified as a “discloseable transaction,” requiring public disclosure but not shareholder approval.

Details of the Acquisitions and Rationale

The latest acquisition (on 18 March 2026) involved US\$3 million in principal for a consideration of approximately US\$3.26 million. Previous tranches included two acquisitions made on 28 January 2026 and 2 March 2026, each of US\$5 million principal, with total consideration for those acquisitions being approximately US\$10.96 million (about HK\$86.02 million). The aggregate principal acquired across all tranches totals US\$13 million, for a total consideration of US\$14.22 million (about HK\$111.65 million).

The acquisitions were funded entirely from the Company’s internal resources, indicating no external financing or additional leverage was used.

The investment aligns with CISI’s stated strategy of achieving a stable return within an acceptable risk profile by diversifying its investment portfolio across various asset classes, including bonds and other financial instruments. The Directors believe this acquisition will help balance and diversify the Group’s asset base and strengthen its future revenue streams.

Issuer Information

• Lloyds Banking Group plc is a prominent financial institution, primarily engaged in retail, insurance, pensions, investments, and commercial banking.
• The issuer is largely owned by institutional investors, with its shares and ADRs actively traded in the UK and U.S. markets.

Potential Impact for Shareholders

• Stable Yield: The 8% fixed coupon on the perpetual securities could provide the Group with steady income, potentially supporting dividend stability or growth.
• Diversification: The acquisition of high-grade perpetual bonds from a major European bank diversifies the Group’s investment portfolio, which may help reduce risk and enhance long-term shareholder value.
• Regulatory Transparency: The transaction is disclosed as per Hong Kong Listing Rules, which reflects prudent corporate governance and transparency to shareholders.
• No Shareholder Approval Required: Although price sensitive, the transaction does not require formal shareholder approval, which means the investment can be executed efficiently, but investors should monitor how this sizable investment performs within the Group’s overall portfolio.

Board Statement and Governance

The Board, comprising both executive and non-executive directors, unanimously considers the acquisitions fair, reasonable, and in the best interests of the Company and shareholders as a whole. The Company’s Chairman is Mr. Xiong Bo, with other directors including Mr. Lin Dan (executive) and three independent non-executives: Ms. Ye Jianfang, Mr. Tian Li, and Ms. Du Li.

Other Notable Details

• Currency Exchange Rate: All USD amounts are translated into HKD at a rate of US\$1 = HK\$7.85 for illustration purposes. Actual rates may vary.
• Transaction Counterparties: Since the acquisitions were conducted on the open market, the identities of the sellers are unknown but believed to be independent third parties.

Conclusion

This sizable investment in high-yield perpetual securities from a reputable European bank is a noteworthy development for CISI’s shareholders. It may impact future earnings and the risk profile of the Group’s portfolio, and could influence the market’s perception of the Company’s strategic direction, thereby potentially affecting share valuation in the short to medium term.

Disclaimer: The above article is for information purposes only and does not constitute investment advice. Investors should conduct their own research or consult professional advisors before making investment decisions. The information is based on company disclosures as of 19 March 2026 and may be subject to change without notice.

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