Citic Pacific agrees to asset acquisition from parent

Citic Pacific has agreed to buy almost all of its parent's assets not already under the Beijing-backed steel-to-property Hong Kong-listed firm for 227 billion yuan (HK$284.8 billion), which would make it the second-largest listed conglomerate in Greater China after the Li Ka-shing-led Hutchison Whampoa.

It is the largest asset injection deal by a red chip - a Hong Kong-registered company holding mainland state-owned assets. Citic Pacific will pay for the injected assets by issuing shares worth 177 billion yuan to Citic Group, and 50 billion yuan by shares sold to institutional investors.

Chang Zhenming, chairman of Citic Pacific, called it a landmark "win-win" deal for Citic Pacific's shareholders and Citic Group, China's first overseas investment vehicle set up in 1979 by former vice-president Rong Yiren with support from the late paramount leader Deng Xiaoping.

"The complete listing of Citic Group in Hong Kong, a landmark innovative move, helps advance state-owned enterprise reform," he told reporters. Citic Pacific has signed an agreement to buy 100 per cent of direct parent Citic Limited, which holds 99 per cent of ultimate parent Citic Group's assets.

Citic Pacific president Zhang Jijing said the remaining 1 per cent consists of a stake in Shenzhen-listed cable television operator Citic Guoan Information, and some early-stage environmental protection businesses.

The acquisition price, assessed by China Enterprise Appraisals at the end of last year, represents a 0.8 per cent premium to the audited book value of the assets to be injected.