Tianjin HKMC Equity Investment Fund Management Co., Ltd. (Tianjin HKMC), the subsidiary of Yang Rong’s Hong Kong-listed company HKMC (01188.HK), will manage the 20.90-percent stake of Xinchao Industrial (600777.SH) in trust, in order to boost the latter’s power battery business and help it break into the new energy vehicle industry, according to an HKMC statement.
Tianjing HKMC will have related voting and management rights of Xinchao Industrial by managing the largest stake of Xinchao Industrial owned by Dongrun Development in trust, said the statement.
In addition, as part of its deal on introducing the power battery business to Xinchao Industrial, Tianjin HKMC will be able to reshuffle the firm’s board and management team. So the Yang Rong team will practically control Xinchao Industrial, which is set to be Yang Rong’s financing and manufacturing platform in China.
“In the form of stake trust, Yang Rong actually becomes the shareholder of Xinchao Industrial. This form is quite fresh in the capital market. Once Yang Rong introduces the new energy vehicle business into the listed company, its business will be changed fundamentally,” said an investment bank industry analyst.
HKMC announced the purchase of Zhejiang-based battery maker GBS Energy in this May. “Yang Rong is likely to put GBS’s assets into the listed company,” said an analyst.
It’s been reported that Xinchao Industrial’s business is quite fragmented and focuses mainly on cables and real estate. Effectively integrating the current business and smoothly introducing new resources will be key challenges for Yang Rong’s team.
In addition, according to the agreement signed by the two parties, if Xinchao’s average stock price dips below ¥10 ($1.47) for five consecutive days in the year following the signing, Dongrun Development can cancel the trust deal.