Shenzhen to sell 51pc stake in trust company

China Resources will help improve management at the firm

The Shenzhen government is in talks to sell a controlling stake in Shenzhen International Trust & Investment to state-owned conglomerate China Resources Group in a move to shore up the trust firm's management, a source familiar with the deal said.

China Resources will buy 51 per cent of the trust firm from the city government's assets supervision and administration commission, which will retain a 44 per cent stake.

The remainder is split among several state-controlled firms including Shenzhen Economic Zone Development (Group), Shenzhen State-owned Duty-free Commodity Group, Shenzhen Airport (Group) and Shenzhen Yantian Port Group.

The Shenzhen government and China Resources have been in talks over the sale for more than six months, and the terms will be finalised soon, one source said.

The deal could be valued at more than one billion yuan, based on Shenzhen International Trust's registered capital of two billion yuan.


A China Resources source confirmed the talks without giving details. Shenzhen International Trust could not be reached for comment.

'Shenzhen government is trying to cut back its responsibility in managing the trust company, but still wants to enjoy the profit by remaining as the second-largest shareholder,' the source said.

The China Banking Regulatory Commission has been encouraging trust firms to bring in strategic investors to improve management.

Beijing's city government is seeking to sell 54 per cent of Beijing International Trust & Investment, which has 2.8 billion yuan in assets. The Gansu provincial government also plans to sell its loss-making wholly owned Gansu Trust & Investment.


Mainland trust firms ran various financial services including banking, securities and fund managements before 2001, when they were forced by the regulator to divest most of their businesses.

Under the commission's guidance, the role for trust companies is to manage funds for others in the form of trustees.


Total funds under China's trustees amounted to 195 billion yuan at the end of last year, according to China Trust Research.

Shenzhen International Trust reported net profit of 129 million yuan last year, compared with 122 million yuan in 2004, making it the most profitable trust company in the industry.

Apart from providing trust services, it owns 30 per cent of Guosen Securities, 35 per cent of one of the two Wal-Mart joint ventures in China and two property developers.


Strategic deal

Shenzhen and China Resources have been in talks for six months

Deal could be valued at more than one billion yuan


City government will maintain 44 per cent holding