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CSAH receives USD 4.4bn investment
Posted on Tuesday, 23 July 2019 08:25
The state-owned enterprise (SEO) holding listed China Southern Airlines is opening up its equity base to outside investors by accepting a CNY 30.00 million (USD 4.36 billion) investment from provincial and local government entities.

China Southern Air Holding (CSAH) said Guangdong Hengjian Investment, Guangzhou City Construction Investment and Shenzhen Penghang Equity Investment Fund Partnership shall each make contribution of CNY 10.00 billion in cash.

All three of the incoming investors are state entities under the municipal governments of Guangdong, Guangzhou and Shenzhen.

The cash injection ticks one of Beijing’s strategic boxes, namely, mixed ownership reform, while improving the group’s debt-to-asset ratio and funding core air transportation operations, particularly overseas expansion.

It will also support activities, in line with the Belt and Road initiative, within the Pearl River Delta, also known as Guangdong-Hong Kong-Macao Greater Bay Area.

CSAH will be able to further promote the development of the aviation sector within Guangdong, for example, by establishing and strengthening intra-provincial air routes for smaller cities within the region.

Upon completion, the status of the holding company as one of 96 SEOs under the central government will not change, nor will its role as the controlling shareholder of China Southern.

The carrier posted attributable net profit of CNY 2.65 billion on revenue of CNY 37.63 billion in the first three months of 2019, up from CNY 2.54 billion on CNY 34.10 billion in Q1 2018.

CSAH’s capital injection is the fourth-largest deal targeting a mainland-based company announced in 2019 to date, according to Zephyr, the M&A database published by Bureau van Dijk.

It is also the largest on record for the global air transportation sector – ahead of the USD 4.30 billion nationalisation of Japan Airlines International in 2010.

© Zephus Ltd