SOEs Taking Over Private Economy

Private companies are selling out to SOEs and becoming the second-largest shareholder. Some companies have immediate pressure such as debt troubles, but others are hoping to tap the power of the state.

21st Century: “控制权”转让乍热的秘密:纾困第二季国资角色悄然转变
Sogou: The Secret of "Control Right" Transfer: The Role of State-owned Assets Changed Quietly in the Second Season of Relief
Since the fourth quarter of last year, more and more listed companies led by local governments have been acquired, which indeed shows cross-regional characteristics. Through the data, the secret of off-site acquisition is gradually revealed.

For example, state-owned assets in central and western cities have acquired listed companies along the southeast coast. On the one hand, the purpose of bailing out listed companies is clear. On the other hand, it is a better way to revitalize and integrate local resources than relying solely on local platforms to revitalize assets by holding hands with listed platforms in active investment and financing areas.

Not to mention, many cities do not even have A-share companies, which are greatly hampered in the process of industrial integration.

The new trend is becoming clearer in another round of transfer of control rights of listed companies.

According to our reporter's understanding, in this wave of transfer of control rights, agreement transfer, agreement transfer+voting right entrustment and voting right entrustment have become the main methods, and new methods such as agreement transfer+voting right abandonment have emerged. In addition, judging from the nature of the transferee, compared with the fourth quarter of last year, the proportion of private enterprises selling is also increasing.

"The current market situation is different from last year. Many major shareholders of listed companies are not in such a hurry to resolve the risk of stock pledge, but they hope to introduce a powerful controlling shareholder with industrial synergy for the sake of the future of listed companies. The founders are willing to be second shareholders. " On June 14, an investment banker from a securities firm in Shenzhen told reporters in 21st century business herald.
In some cases a smaller, local govt backed SOE sells out to a larger SOE, but private companies are also giving up control:
Statistics from reporters in 21st century business herald show that in the past month, about 15 listed companies have issued suggestive announcements on the change of control rights, announcing the change of ownership of the largest shareholder. Among them, 9 listed companies are state-owned and 6 are private enterprises. Compared with the fourth quarter of last year, the proportion of private enterprises accepting control of listed companies has increased, and powerful parties such as Liu Yonghao and East China Medicine have also begun to make moves.
Typically, on June 14, Saifutian announced that the actual controller Cui Zhiqiang intends to transfer 16.73% of the controlling shareholder Wuxi Saifutian Steel Rope Co., Ltd. to Suzhou Tiankai Huirun Industrial Investment Partnership (hereinafter referred to as "Tiankai Huirun"), and entrust the voting rights corresponding to the remaining 50.19% of Wuxi Saifutian held by it to Tiankai Huirun. After the transfer is completed, Saifutian's actual controller will be changed from Cui Zhiqiang to no actual controller.

"At present, the company only knows that the other party takes control first. There is no clear plan. The company's management team is relatively stable." On June 14, Saifutian Securities Department told reporters in 21st century business herald that the new shareholders have a background in state-owned assets and are relatively strong.

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