China Railway Construction plans to spin off unit for listing on Shanghai’s Star Market
- China Railway Construction Heavy Industry is awaiting approval from Shanghai Stock Exchange
- The company plans to list no more than 25 per cent of its outstanding shares
China Railway Construction plans to spin off its high-end equipment manufacturing unit and list it on Shanghai’s new technology board, as the nation’s biggest contractor of railway projects seeks funds to enhance its R&D capabilities.
The company’s board approved a proposal for China Railway Construction Heavy Industry (CRCHI) to sell shares on the Science and Technology Innovation Board, or the Star Market, China Railway said in a filing to the Shanghai Stock Exchange. The flotation is awaiting approval from the bourse.
The proposal came less than a week after the watchdog, China Securities Regulatory Commission, rolled out a rule that makes it easier for publicly traded companies to spin off subsidiaries for domestic listings.
Parent companies whose subsidiaries seek spin-off listings need to be profitable for three consecutive years and post aggregate net profit of 600 million yuan (US$85.7 million), compared with the previous threshold of 1 billion yuan, according to the rule.
“It is necessary for the company to spin off CRCHI to further consolidate core competitiveness in high-end equipment manufacturing and promote sustainable development of the company,” China Railway said in the statement.