Fosun Selling Stakes in Four Industrial Companies to Steel Giant Jianlong for $980M

The new year brings fresh asset disposals by troubled Chinese conglomerate Fosun International, which has agreed to sell its entire interest in four industrial companies controlled by steel magnate Zhang Zhixiang for a total of RMB 6.7 billion ($980 million).

Fosun will exit its stakes of 25.7 percent in Tianjin Jianlong Iron & Steel Industrial and 26.7 percent each in Jianlong Steel Holdings, Beijing Northern Jianlong Industrial and Janeboat Holdings, the Shanghai-based group said Thursday in a filing with the Hong Kong stock exchange.

The buyers are companies owned by Zhang and his Beijing Jianlong steel-smelting group. Upon completion of the transaction, Zhang and Jianlong will hold the entire interest in Jianlong Steel Holdings, Beijing Northern Jianlong and Janeboat Holdings, as well as a 74.3 percent stake in Tianjin Jianlong, with the balance held by Shanghai Junneng Industrial.

“The disposals will enable the group to focus more resources on key development strategies and key projects and contribute to the long-term success of the group,” Fosun chairman Guo Guangchang said in the filing.

Finances in Jeopardy

HKEX-listed Fosun saw its financial position deteriorate in the second half of 2022, experiencing a 30 percent decline in the market value of key holdings from the end of June to 20 October, according to an estimate by Moody’s Investors Service.

Moody’s in October downgraded Fosun and gave the group a negative outlook as a final rating action before the conglomerate cut ties with the agency.

Notorious for its busted bets on faded brands like Club Med and Thomas Cook, Fosun has sought to trim its overstretched holdings and refocus on core investments.

The group told analysts in October that it planned to sell as much as $11 billion worth of non-core assets within 12 months, Bloomberg reported. The assets it considers core include pharmaceutical, retail, tourism and insurance interests.

Lanvin Stock Flop

In early November, Fosun announced that it would raise $561 million by selling a partial stake in Zhaojin Mining Industry. Throughout that month, news trickled out that the group was eyeing disposals of shareholdings in reinsurance firm Peak Re, Alibaba logistics arm Cainiao and Indian drugmaker Gland Pharma.

The Fosun-owned Lanvin Group, a luxury fashion brand, proceeded with a New York stock listing in December via a merger with a SPAC called Primavera Capital, but shares fell 25 percent in their first trading day.

Lanvin raised more than $150 million in fresh capital at a valuation of $1 billion, the Wall Street Journal reported. The company’s shares remained more than 26 percent off their debut price at the close of trading on Thursday.