Tianjin FAW Xiali Automobile’s controlling shareholder to offload stake as SOE reform moves forward
State-owned FAW Group said it’s got permission to sell its 25 per cent stake as Beijing’s mixed-ownership reforms move forward
Tianjin FAW Xiali Automobile, one of the most popular carmakers in China, said on Monday its controlling shareholder has been given government approval to shed its stake.
The company said in a filing to the Shenzhen Stock Exchange that it was told by state-owned China FAW Group Corporation, a vehicle manufacturer headquartered in Changchun, that it had obtained verbal approval to sell its 394.5 million shares, about a quarter of the total issued share capital.
Tianjin FAW Xiali said FAW Group got the go-ahead to sell its holding shares via a phone call from China’s State-owned Assets Supervision and Administration Commission (SASAC).
The SASAC is responsible for managing the remaining state-owned enterprises, including appointing top executives, approving any mergers or sales of stock or assets, and drafting laws.
The Chinese government has been encouraging state financing institutions and the country’s private technology giants to invest in weak state enterprises that are grappling with debt and inefficiency, under its “mixed ownership reform” programme.
In August, the state parent of China Unicom, the least profitable of the country’s three telecom operators, sold a combined 35.2 per cent equity stake to more than a dozen investors as part of a 78 billion yuan (US$11.9 billion) deal under the scheme. Among the new investors are Tencent Holdings, JD.com, Baidu and Alibaba Group.
Tianjin FAW Xiali said it would attempt to find a suitable buyer of FAW Group’s shares during a period of 10 working days between November 7 and 20. But it said it was uncertain whether the sale of the shares would eventually get the necessary approval from the commission.
The potential transferee should have a clear development strategy and complementary business resources, and be able to propose viable development plans for the carmaker, according to the filing.
The transferee must also promise to inject “good quality” assets to Tianjin FAW Xiali within a certain period of time, it said.
China FAW Group Corporation, commonly referred to as FAW as its original name was First Automotive Works, broke ground on its first factory on July 15, 1953.
It produced China’s first Jiefang commercial truck in 1956. It followed that in 1958 with two more firsts: the Dongfeng car and the Hongqi luxury sedan.
FAW has at least nine wholly-owned subsidiaries and controlling shares in five partially-owned units, including Tianjin FAW Xiali Automobile and the foreign joint venture, FAW-Volkswagen Automobile.，