Analysis of the Decline of Guosen Securities' Investment Banking Business and Research on Revitalization Strategies

Based on the obtained information, I will systematically analyze the current decline situation and revitalization strategies of Guosen Securities’ investment banking business from multiple dimensions.

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Guosen Securities ranked first in the number of A-share IPO underwriting projects in the industry several times between 2007 and 2015, earning the reputation of ‘IPO Sponsor King’ [1]. However, in recent years, its investment banking business has shown a cliff-like decline:

Year	Net Income from Investment Banking Business (100 million RMB)	Year-over-Year Change
2021	19.79	-
2022	18.16	-8.24%
2023	13.63	-24.94%
2024	10.20	-25.17%
First Three Quarters of 2025	6.08	-6.04% YoY

[2], and the investment banking business has fallen from a core advantage to a ‘drag’ on performance.

• 2023: 37 cases
• 2024: 19 cases
• 2025: 16 cases [2]

• 2024: 2.794 billion RMB
• 2025: 0.604 billion RMB, a
  78.38% year-over-year drop
• 2025 IPO underwriting and sponsorship income was only 0.048 billion RMB, a
  75.5% year-over-year decline
  [3]

As of 2025, Guosen Securities only has 4 reserved IPO projects left [1].

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Insiders in the investment banking sector point out that in its early years, Guosen Securities had a large investment banking team, a high number of sponsors, and a large volume of projects, but its operation model was relatively extensive, with weak internal management and difficulties in quality control. Subsequently, as regulatory requirements became increasingly stringent, its ‘operating approach gradually became incompatible with the times’ [1].

• Received at least 4 fines related to investment banking business in 2024 [1]
• Involving issues such as dereliction of duty in IPO due diligence and inadequate continuous supervision
• Violations expose serious loopholes in the risk control and compliance system

• Among the 43 IPO enterprises sponsored by Guosen Securities from 2021 to 2023, nearly 30 saw year-over-year declines in operating revenue or net profit in the year of listing, accounting for over
  60%
  [1]
• Baibaolong Case: Sponsored by Guosen Securities, the company went public in 2015 and raised 611 million RMB, and Guosen Securities assisted it in completing a 988 million RMB private placement in 2016. However, it was found that Baibaolong inflated its total operating revenue by 1.276 billion RMB and total profit by 410 million RMB from 2013 to 2018, which Guosen Securities failed to detect for a long time [1]
• Lierda Case: Its performance reversed rapidly after listing, with a net profit excluding non-recurring gains and losses of -18.31 million RMB in 2023. The Zhejiang Securities Regulatory Bureau issued a warning letter to Guosen Securities and two sponsors [1]

Year	Number of Withdrawn Projects	Withdrawal/Rejection Rate
2022	7	20.37%
2023	7	21.62%
2024	8	42.11%
2025	5	31.25% [3]

In 2025, Guosen Securities’ IPO sponsorship failure rate reached as high as

, which is at a relatively high level among major securities firms [3].

In April 2024, Guosen Securities appointed Wu Guofang, who has working experience at the China Securities Regulatory Commission (CSRC), as Vice President in charge of investment banking business, which was highly anticipated by the market. However,

[4]. This ‘personnel move’ not only failed to bring benefits but also caused negative impacts.

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In 2025, the IPO market underwent major changes: as of December 24, the number of A-share initial public offerings in the year was only 98, a

compared to over 300 in 2023 [4]. In the first three quarters, the overall investment banking business revenue of 43 listed securities firms dropped by nearly [4].

• In 2025, the top five securities firms (Guotai Junan, Haitong Securities, CITIC Construction Investment, Huatai United, CICC, etc.) accounted for
  73.3% of the market share
  with a total underwriting amount of 96.59 billion RMB [3]
• Forming a leading echelon with a Matthew effect, known in the industry as the ‘Three CITICs and Two Taibais’

Against this backdrop, small and medium-sized securities firms that failed to transform in time have seen their market share plummet, with Guosen Securities being the first to be affected.

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1. Restructure Risk Control System
   • Establish a full-process project quality control mechanism
   • Strengthen due diligence standards and raise internal review thresholds
   • Improve the continuous supervision responsibility tracking system

2. Clear Historical Burdens
   • Properly handle existing problematic projects
   • Establish a project ‘retrospective’ self-inspection mechanism
   • Proactively resolve potential risk projects

3. Recruit Compliance Talents
   • Recruit professionals with regulatory background
   • Strengthen professional competence training for sponsors
   • Establish a practice quality assessment and accountability mechanism

1. Layout Policy-Encouraged Directions
   • Mergers and Acquisitions (M&A) Business
     : Seize policy opportunities such as the ‘Six Guidelines on Mergers and Acquisitions’, establish a database of potential M&A targets, and serve industrial M&A and state-owned enterprise reform [4]
   • Beijing Stock Exchange (BSE) Business
     : Serve as a strategic pivot for innovative small and medium-sized enterprises
   • Public REITs Business
     : Guosen Securities’ first REITs project achieved a breakthrough in 2024, and further deepening of this business is needed [2]
   • Bond Business
     : Having obtained the qualification of lead underwriter for non-financial enterprise debt financing instruments in the inter-bank market, Guosen Securities should expand its market share [2]

2. Implement a ‘Dual Focus’ Strategy
   • Regional Focus
     : Deeply cultivate advantageous regional markets and establish regional strongholds
   • Industry Focus
     : Build differentiated competitive advantages in professional fields such as high-end manufacturing, TMT, and new materials [2]

3. Explore ‘Investment + Investment Banking’ Synergy
   • Strengthen collaboration with the company’s research and investment departments
   • Lay out high-quality growth enterprise projects in advance
   • Establish a characteristic project reserve mechanism similar to the ‘Lingyue Plan’

1. Seize Industry Integration Opportunities
   • Pay attention to strategic opportunities in the wave of securities firm mergers
   • Explore the possibility of strategic cooperation or integration with other institutions

2. Strengthen Technology Empowerment
   • Enhance the digitalization level of investment banking business
   • Use AI technology to assist project screening and risk identification
   • Establish an intelligent project management system

3. Reshape Talent Strategy
   • Optimize incentive mechanisms to attract excellent investment banking talents
   • Establish a talent training echelon
   • Strengthen team cultural reconstruction

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Guosen Securities’ investment banking business is not only facing market share loss but also a systemic crisis of invalid development model, damaged reputation, and talent loss. Relying solely on traditional IPO business is difficult to restore its former glory.

1. Transform from ‘IPO Sponsor King’ to ‘Boutique Investment Bank’
   : Focus on specific industries and regions to build professional and differentiated competitive advantages
2. Shift from a single IPO business to a diversified business matrix
   : Driven by multiple segments such as M&A, bonds, REITs, and BSE business
3. Transform from scale expansion to quality priority
   : Regain market trust through project quality and practice compliance

• The restructuring of the compliance and risk control system is a prerequisite
• The reconstruction of a high-quality talent team is the core support
• The selection of a differentiated competitive strategy is the key breakthrough
• Strategic patience and long-term investment are necessary guarantees

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Behind the 48% decline of Guosen Securities’ investment banking business over four years is the deep-seated contradiction between the extensive development model and the regulatory requirements of the new era. Revitalizing the status of ‘IPO Sponsor King’ is not simply restoring the historical scale, but requires systematic reforms in three aspects: compliance reconstruction, business transformation, and strategic upgrading. Against the backdrop of the shrinking IPO market and reshaped industry pattern, whether Guosen Securities can seize policy opportunities in M&A, BSE, and bond business will determine whether it can re-establish differentiated advantages in the new competitive landscape.

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[1] Sina Finance - “The ‘IPO Sponsor King’ Fades: Guosen Securities’ Golden Signboard Tarnishes, with Over 60% IPO Withdrawal and Rejection Rate This Year” (https://finance.sina.cn/tech/2025-03-08/detail-inenwatz2257138.d.html)

[2] Sina Finance - “While Profits Surge, Shareholders Sell Down: What’s the Gold Content of Guosen Securities’ 87% Net Profit Growth?” (https://finance.sina.cn/2026-01-18/detail-inhhttqt7582905.d.html)

[3] Sina Finance - “SDIC Securities and Guosen Securities Have Over 70% IPO Sponsorship Failure Rate; Zhongtai Securities’ Underwriting Amount Plunges Nearly 80% Year-over-Year” (https://finance.sina.com.cn/stock/observe/2026-01-06/doc-inhfknam7068947.shtml)

[4] Xinhua Net - “‘First-Class Investment Bank’ Sets the Tone: China’s Securities Industry Sings the ‘2024 Variations’” (http://www.news.cn/finance/20241227/df6c0f4f4d4448998d1503144eb13603/c.html)

[5] Securities Times - “In-Depth | 2025 Annual Strategy for the Securities Industry: From Scale-Oriented to Value Creation” (https://finance.sina.com.cn/roll/2024-12-05/doc-incymitm2881178.shtml)