China economy

State-owned Citic takes over troubled tycoon Ye Jianming’s investments in Czech Republic 

The Chinese conglomerate will take over 49pc stake in CEFC Europe, but Ye Jianming’s company will still have a controlling share

PUBLISHED : Friday, 20 April, 2018, 1:14pm
UPDATED : Friday, 20 April, 2018, 11:04pm

Citic Group, China’s biggest state conglomerate and the original “Red Capitalist”, is stepping in to prop up businesses and investments in the Czech Republic owned by troubled oligarch Ye Jianming’s CEFC, according to state news agency Xinhua on Friday.

Citic will hold 49 per cent of CEFC Europe, while Ye’s company will maintain a 51 per cent controlling stake in the venture, Xinhua reported, citing a memorandum of understanding signed on Thursday by Czech President Milos Zeman. 

A spokesman for Citic Ltd, the listed flagship of Citic Group, said the listed firm was not involved in the investment. 

The parent company too was not available for comment.

China freezes CEFC’s shares, casting doubt on energy giant’s future

Ye was appointed special economic adviser to Zeman in early 2015. Sources confirmed what the Czech authorities had said in March about Ye being investigated in China on “suspicion of violating the law”.

State firms are the most ideal ones to take over the overseas projects because they are less sensitive to profits and more reliable politically
Shaun Rein, China Market Research

Citic will now “complete all current investments started by CEFC Europe in the Czech Republic” as well as undertake new, unspecified investment projects, according to Xinhua.

Chinese conglomerate CEFC puts property portfolio up for sale

The intervention by Citic takes one unresolved problem off CEFC’s hands, as China’s largest private oil conglomerate grapples with maintaining its debt-fuelled acquisitions following its founder’s downfall. 

What remains outstanding is CEFC’s stake in Russia’s state oil company Rosneft. CEFC paid US$9.1 billion last September for a 14.2 per cent to become its third-largest shareholder.

Would-be Rosneft investor CEFC pledges unit’s stock for financing

Since Ye’s problem in mid-February, the Rosneft deal has been stuck in limbo.

“State firms are the most ideal ones to take over the overseas projects because they are less sensitive to profits and more reliable politically,” said Shaun Rein, managing director of China Market Research, a strategic market intelligence firm.

“They will also take over assets in countries that China is trying to wield more political power. As for the Czech Republic, it along with Hungary, are critical to China’s ambitions in Europe. It is easier to buy influence there,” he said.

China takes over nation’s biggest private oil group in debt crackdown

Up to 496 million shares of Shenzhen-listed CEFC Anhui International were frozen by four Chinese courts in late March. Shanghai-based CEFC, established by Ye in 2002 when he was in his mid-20s, had spent at least US$1.7 billion since 2015 buying energy-related businesses in Romania, the United Arab Emirates, Russia and Chad. The company also invested another US$1.2 billion buying financial services assets in the US and the Czech Republic.

Besides financial services, CEFC has stakes in Czech brewery group Pivovary Lobkowicz, Prague soccer club Slavia Praha, the national airline, hotels and property.