(Yicai Global) March 15 -- Fosun International’s shares rose after the debt-laden Chinese conglomerate said it had sold its entire stake in Nanjing Iron & Steel to China’s biggest private steelmaker for CNY13.6 billion (USD2 billion).

Fosun [HKG: 0656] closed 2.3 percent higher at HKD6.36 (81 US cents) a share today, after opening up by 6 percent in the morning.

Jiangsu Shagang Group will buy Fosun’s 59.1 percent stake in Nanjing Iron & Steel, a Shanghai-listed firm under Nanjing Iron & Steel United, Fosun said yesterday. The deal represents a 6.7 percent discount on Nanjing Iron & Steel’s closing price yesterday.

Shares of Nanjing Iron & Steel [SHA: 600282] fell 2.5 percent to CNY3.91 (57 US cents) today, giving it a market capitalization of CNY24.3 billion.

Founded in 1992, Shanghai-based Fosun has interests in a wide range of sectors, and bought into Nanjing Iron & Steel United in 2003. The Shanghai-based conglomerate has sold stakes in companies including Tsingtao Brewery, China New Life Insurance, and Yuyuan Tourist Mart Group, thereby raising funds to boost its liquidity.

Fosun announced on Oct. 19 that it had signed a framework agreement with Shagang to sell its stake in Nanjing Iron & Steel for about CNY16 million. The actual price is lower because Fosun said it received dividends of CNY1.8 billion (USD261.5 million) from Nanjing Iron & Steel.

Nanjing Iron & Steel’s sale will help Fosun focus its resources on its key development strategies and projects, the firm added, noting that it is also an important step for Fosun’s plan to completely withdraw from the iron and steel industry.

Nanjing Iron & Steel United had contributed much to Fosun’s earnings in recent years, but as the steel industry entered a downturn in 2022, its earnings performance declined. In the first half of last year, revenue at Nanjing Iron & Steel United fell nearly 10 percent from a year earlier to CNY34.9 billion, while net profit plunged 34 percent to CNY1.5 billion.

Fosun also announced in January that it plans to sell its stakes in three other iron and steel companies to Beijing Jianlong Heavy Industry Group.

Editor: Futura Costaglione