Power Utility Shaoneng Goes Limit Up as Baoneng Tycoon Yao Zhenhua Takes Control
An Zhuo
DATE:  Jul 15 2020
/ SOURCE:  Yicai
Power Utility Shaoneng Goes Limit Up as Baoneng Tycoon Yao Zhenhua Takes Control Power Utility Shaoneng Goes Limit Up as Baoneng Tycoon Yao Zhenhua Takes Control

(Yicai Global) July 15 -- Shares of Shaoneng Group, an electricity generator which has had no actual controller for almost three years, surged by the daily exchange-imposed limit after saying Chinese billionaire businessman Yao Zhenhua is set to take charge, realizing a long-held ambition.

Shaoneng [SHE: 000601] gained 10 percent today to close at CNY6.95 (99.4 US cents), giving the Shaoguan, Guangdong province-based company a market capitalization of CNY7.5 billion (USD1.1 billion).

Shaoneng will issue up to 324 million shares to its largest shareholder, Shenzhen Hualitong Investment, a unit of Baoneng Group, a real estate and financial services conglomerate chaired by Yao, for CNY4.6 each, it said in a statement yesterday. The total amount will not exceed CNY1.5 billion (USD215 million).

Through the offering, Hualitong Investment’s stake will reach 38.4 percent, making it the controlling shareholder and Yao the actual controller.

As early as 2015, Yao, then the chairman of Foresea Life Insurance, had planned to buy Shaoneng and through the insurer repeatedly bought shares in the secondary market to become its biggest investor. Shaoneng’s original actual controller was Shaoguan Municipal State-owned Assets Supervision and Administration Commission.

But plans to further increase his stake in Shaoneng were shelved after regulators punished Foresea Life in 2017 for a hostile takeover attempt of real estate giant China Vanke. Yao was disqualified and banned from entering the insurance sector for 10 years. As the shareholdings were dispersed, Shaoneng ended up with no actual controller.

Foresea Life transferred all 19.95 percent of its share in Shaoneng to Hualitong Investment in March for CNY2.6 billion, marking Yao’s return. Before yesterday’s non-public offering, Shaoguan Municipal SASAC held 14.44 percent of the target company and was the second-largest shareholder.

Founded in 1993, Shaoneng’s main business is electricity generation, while it is also in the building materials and environmental protection businesses. Its operating income jumped 25.6 percent to CNY4.3 billion last year from a year earlier, while net profit soared 32.4 percent to CNY401 million (USD57.4 million).

Yao, Baoneng and its affiliates remain active in the capital market despite punishment over Vanke. In addition to Shaoneng, Baoneng and affiliates also hold equity in several listed companies, including real estate developer Shenzhen Overseas Chinese Town and retailer Nanning Department Store.

Editors: Dou Shicong, Peter Thomas

Follow Yicai Global on
Keywords:   Shaoneng Group,Baoneng Group,Yao Zhenhua