Gree Goes Limit Up a Second Day as China's Hopu Fund Is Said to Seek 15% Stake
Zhang Lihua
/SOURCE : yicai
Gree Goes Limit Up a Second Day as China's Hopu Fund Is Said to Seek 15% Stake

(Yicai Global) April 10 -- Shares in Gree Electric have hit the daily limit for the second day on the trot after reports that renowned Chinese investment fund Hopu will pick up a 15 percent stake from its lead shareholder.

Its stock [SHE:000651] soared 9.9 percent to CNY57.1 (USD8.50) in trading today, setting a single-day turnover high of CNY17.4 billion (USD2.6 billion) for the company, following a similar percentage gain yesterday.

Today's surge comes after a report from financial news outlet Caixin suggested that Hopu, which was founded by Goldman Sachs partner Fang Fenglei, would partner a Macau-based investment firm to pay CNY41.1 billion for a 15 percent stake in the company. Hopu staff declined to comment when Yicai Global called today.

The deal will improve the target's governance structure and give it greater scope for an increase in valuation, according to an analysis piece from investment bank CICC.

Shares soared yesterday after state-backed Gree Group, which holds over 18 percent of Gree Electric, said it would sell a stake of the same amount while maintaining the right to pick the company's chairperson. Dong Mingzhu, one of China's most famous businesswomen, is the subsidiary's current leader.

Dong told China Taxation News yesterday that Gree Electric would pump its CNY5.3 billion tax savings from last year -- a result of national tax cuts -- into research and development

Investors in Hopu include US-based Goldman Sachs and Singaporean sovereign investment fund Temasek. It bought more than 3 billion shares in Bank of China from Royal Bank of Scotland in January 2009, and in May the same year led a syndicate in the purchase of 13.5 billion shares in China Construction Bank from Bank of America, costing about USD7.3 billion.

The fund also partnered state-backed food processor China National Cereals, Oils and Foodstuff in 2009 to invest in China Mengniu Dairy, one of the country's leading dairy firms.

Editor: James Boynton

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Keywords: Hopu Fund , Gree