Investors eye giant state firm

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Last updated at: (Beijing Time) Monday, January 12, 2004

Investors eye giant state firm

China's largest equipment manufacturer says foreign and domestic investors are lining up to buy into 17 subsidiaries worth 6.5 billion yuan (US$783.13 million).

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China's largest equipment manufacturer says foreign and domestic investors are lining up to buy into 17 subsidiaries worth 6.5 billion yuan (US$783.13 million).

Shanghai Electric (Group) Corp is looking for investors to buy into the subsidiaries in order to raise capital for expansion and restructuring, with an eye on eventually listing in Hong Kong, according to senior executives with the state-owned company.

"Domestic private companies have great interest in the investment and we are in talks with several companies from the Pearl River Delta," said Han Guozhang, vice president of Shanghai Electric, referring to the economically booming area in Guangdong Province.

On Saturday, Shanghai Electric signed an agreement allowing the Shanghai United Assets and Equity Exchange to help the company find potential investors. The sale of any state-owned assets in Shanghai must take place through the exchange.

"It has already caught the attention of lots of overseas investors," said Cai Minyong, the exchange's president. The sale is the largest transfer of state-owned assets in terms of value this year, added Cai.

Shanghai Electric, a 16.3-billion-yuan manufacturing conglomerate owned by the municipal government, says it will use the investment to expand its production of generators, mechanical and electrical equipment, and transportation and environmental protection facilities. The four core-business operations currently account for about 45 percent of the company's total assets.

The move will convert the government-controlled manufacturing conglomerate into a holding company, with the government only retaining a small portion.

"The move marks the first substantial step forward in the restructuring of Shanghai Electric and also heralds the prelude to the reform of the property right of the mechanical and electrical industry in Shanghai," said Huang Dinan, president of Shanghai Electric.

Huang said the ultimate purpose of the restructuring is to list the company on the Hong Kong stock market.

The central government has stepped up efforts to sell 11.83 trillion yuan worth of state-owned assets to maintain the country's rapid economic growth and trim the government's role in corporate management.

Li Rongrong, minister in charge of the State-owned Assets Supervision and Administration Commission, said last year that the government will only retain dominant ownership of sectors that are crucial to the country's security and economy.

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