Carmaker restructures before IPO
Mainland carmaker Chongqing Changan Automobile has undergone a restructuring to prepare the company for its proposed listing in Hong Kong.
The Shenzhen-listed firm also plans to pour more resources into boosting brand recognition among Chinese buyers ahead of the listing.
As part of the reform of non-tradable shares under way on the mainland, the parent of the carmaker - a state-owned armaments producer - has set up a holding company called China Southern Auto Holdings (CSAH) which has taken over the parent's 52 per cent stake in Changan Auto.
The carmaker has hoped to list in Hong Kong since 2003 but A shares in China at that time had a higher valuation than H shares in Hong Kong which raised questions over the compensation for A-share holders. That caused the listing to be postponed.
By setting up a holding company and injecting into it the stake from the parent, the path has been cleared for Changan Auto to be listed in the name of CSAH.
Part of the restructuring has seen the former president and chairman of Changan Auto, Yin Jiaxu, leave his post to take over as chief executive of CSAH. 'As part of our preparation for listing, we plan to pour more resources into brand building,' he said.
Mr Yin emphasised the importance of increasing the popularity of the company's own brands in order to attract investors.
In addition, its proposed listing would succeed in raising funds and giving it a scale that would be 'more eye-catching', he added.
'I expect to increase the number of subsidiaries for CSAH to 20. At present it has got subsidiaries in 13 provinces,' Mr Yin said. 'This will take time,' he added and as a result it was not possible to predict when the listing would proceed.
Chinese newspapers have reported that Changan Auto's parent had charged Mr Yin with the task of beating its rivals in developing a brand and raising US$500 million on the Hong Kong stock market.
