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Mergers & Acquisitions

China’s Huarong Asset Management buys 36pc stake in CEFC China unit

Stock market filing suggests deal, made through Huarong Ruitong Equity Investment Management, worth about US$1.5 billion

PUBLISHED : Saturday, 10 March, 2018, 5:08pm
UPDATED : Saturday, 10 March, 2018, 6:05pm

State-controlled China Huarong Asset Management Co has bought a 36.2 per cent stake in the unit of CEFC China Energy through which CEFC is buying a US$9.1 billion stake in Russia’s Rosneft, according to a stock market filing.

Huarong acquired the stake in CEFC Hainan International in two tranches, in December and February, according to the February 13 filing by CEFC Hainan on an online portal run by the State Administration for Industry & Commerce (SAIC).

CEFC subsidiary CEFC Shanghai International Group Co owns the remaining 63.8 per cent stake.

Huarong made the purchase through its unit, Huarong Ruitong Equity Investment Management Co.

It was not immediately clear how much it paid for the stake, but the filing showed CEFC Hainan’s registered capital expanded by 9.6 billion yuan (US$1.52 billion) as a result of the fund injection.

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Huarong Ruitong and CEFC did not immediately comment.

In an article published late on Friday, Chinese financial magazine Caixin quoted an unnamed China Huarong official as saying the firm did not purchase the stake and instead was ordered to conduct a debt-for-equity swap by the government.

China Huarong could not immediately be reached for comment.

Reuters and other Chinese and international media reported last week that Ye Jianming, the chairman and founder of privately owned CEFC, had been investigated for suspected economic crimes.

CEFC subsequently denied this and said operations were normal.

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In just a few years, CEFC has transformed from a niche fuel trader into a rapidly growing oil and finance conglomerate, with assets across the world and an ambition to become one of China’s energy giants. It agreed in September to buy a 14 per cent stake in Rosneft for US$9.1 billion.

Huarong Ruitong, responsible for fundraising, project selection, debt acquisition and equity management for Huarong’s debt-for-equity swap deals, planned to raise a 50 billion yuan investment fund for deals, Huarong said early last year.