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China Merchants to secure USD 2bn via rights issue
Posted on Wednesday, 13 March 2019 09:27
China Merchants Securities is going cap in hand to shareholders for as much as CNY 15.00 billion (USD 2.23 billion) to finance the ongoing diversification strategy and replenish working capital.

Several high-value rights issues have already been announced globally in 2019 to date and this one will become the third-largest of the year so far, according to Zephyr, the M&A database published by Bureau van Dijk.

Two Indian companies account for the two biggest at the moment, while Chinese iron and steel group Hesteel is currently third, after announcing plans yesterday to tap existing investors for USD 1.19 billion.

On a basis of 3:10, China Merchants intends to issue no more than 2.01 billion A and H shares in total in order to bolster its capital, which, in turn, will support business growth and development.

The company wants to increase efforts in building up its private equity investment fund management and alternative investment operations.

At the same time, it will rely on asset management and public fund platforms to further establish an arm specialising in wealth management.

The “implementation of the above strategies will require further capital contribution to its subsidiaries and associates”.

A tough market environment impacted results for the first nine months of 30th September 2018: operating income was down 18.1 per cent at CNY 7.79 billion from CNY 9.52 billion over the comparable period in 2017.

Similarly, net profit attributable to shareholders fell 26.4 per cent to CNY 3.07 billion from CNY 4.17 billion.

Controlling stockholders China Merchants Finance Investment Holdings - and parties acting in concert, Shenzhen Jisheng Investment Development and Best Winner Investment – are planning to take part in the subscription.

The de facto owner, China Merchants Group, is a large-scale central state-owned enterprise covering the three core industries of transportation, finance and property.

© Zephus Ltd