Foxconn taps natural gas market with purchase of HK$1.48 billion stake in Hong Kong’s IDG Energy

Foxconn Technology will buy a 24.4 per cent stake in Hong Kong-based oil and gas company IDG Energy Investment for a combined HK$1.48 billion (US$190 million), in a move that signals the Taiwan-based electronics manufacturer’s entry into the natural gas market.

Foxconn, also known as Hon Hai Precision Industry, will become IDG’s second-largest shareholder.

Shares in IDG, which has mainly been involved in the exploration and production of crude oil in mainland China, briefly spiked by 31 per cent on Thursday to HK$1.79. They ended the day at HK$1.48, up 8 per cent from their previous close.

IDG has signed an agreement to issue 297 million ordinary shares each to five Foxconn subsidiaries, it said on Thursday. Each of these shares is worth HK$1. After the acquisition, Titan Gas, IDG’s parent company and biggest shareholder, will see its stake shrink to 36.77 per cent from 48.62 per cent.

Terry Gou, the Foxconn chairman, has previously said the company would diversify beyond electronics manufacturing. In June, Foxconn signed an agreement with the local government in Kunshan, Jiangsu province, to invest 25 billion yuan (US$3.78 billion) in research centres and production bases that will focus on developing green energy cars, batteries, internet of things and other technologies.

“The new shareholder [Foxconn], as a world-class multinational group and one of the world’s largest electronics manufacturers, can bring strategic value adding and unique resources to the company,” said IDG.

“The company [IDG] expects that its business development and operations will benefit from Foxconn Technology’s global network, customer resources, public relationship as well as its leading experience of operational excellence.”