China’s Citic Group, one of the company’s oldest and largest investment conglomerates is planning to list on the Hong Kong stock exchange, potentially making global investor capital available to one of China’s best known state-owned companies.
According to a story in the Wall Street Journal, Citic will make shares in its RMB 225 billion (US$36.3 billion) mainland operations available on the Hong Kong exchange by injecting assets into its existing Hong Kong-listed subsidiary, Citic Pacific.
Citic Group was ranked No. 172 in last year’s Fortune Global 500, was founded in 1978 at the request of then leader Deng Xiaoping as part of the push to modernize and open up China’s state-controlled economy.
Citic Pacific announced on Wednesday that a preliminary agreement for the asset injection has been signed which would transfer Citic’s banking, real estate, energy and mining holdings to the Hong Kong firm. Citic Pacific said it would finance the acquisition of its parent’s assets through cash and new shares to be issued.
The decision to transfer assets to the Hong Kong subsidiary means that Citic Group will no longer be looking at raising US$10 billion from a Hong Kong IPO, a transaction that the company had previously been discussing.
Citic had net profit of 34 billion renminbi, or $5.5 billion, last year, according to the announcement.
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