Backdoor listing boosts Citic Pacific

By Lin Jing (China Daily) Updated: 2014-03-28 08:45

Executives chat outside the CITIC Pacific office building in Hong Kong. Shares and bonds of CITIC Pacific Ltd surged on Thursday after its State-owned parent injected prime operating assets into the Hong Kong-listed firm. Reuters

Citic Pacific's share price rose as much as 31 percent on Thursday after its parent company Citic Group's injected assets.

The company announced that it agreed to acquire 100 percent of Citic Ltd, its parent's main operating unit, with about $36 billion of shareholder equity.

Citic Pacific is a Hong Kong-listed company, with focuses on special steel, iron ore and property development on the Chinese mainland. It is 58 percent owned by Citic Group, a State-owned Enterprise headquartered in Beijing.

Alipay to issue online credit cards

CITIC Securities seals deal with CLSA

The deal would be the largest asset injection into a Hong Kong-listed company from the Chinese mainland, data from Bloomberg show. It will also be the first SOE to go public in Hong Kong.

Citic Pacific will purchase the assets with cash and new stocks, which will be issued at HK$13.48 per share.

Citic Ltd, substantially all of the assets of Citic Group, has diverse businesses in securities, mining machinery and real estate. As of 2013, it had unaudited combined total equity of about 225 billion yuan and net income of 34 billion yuan, excluding its interest in Citic Pacific.

Chang Zhenming, chairman of Citic Pacific, said in a statement that the transaction would "greatly increase the breadth and scale of our business, providing an enlarged asset and capital base from which to improve our competitiveness and capture growth opportunities in China".

He added the company will be committed to in Hong Kong, which has an established legal framework, high governance standards and international connectivity.

Roy Lo, deputy managing partner at Shinewing (HK) CPA Ltd, said Citic Group can list overseas as a conglomerate by injecting quality assets into its holding company.