(Yicai Global) May 20 -- SAIC Motor, China’s biggest automaker, has bought a 71 percent stake in Dongzheng Auto Finance Company for CNY1.6 billion (USD237 million) through a judicial auction.
SAIC was the sole bidder at yesterday’s sale of Dongzheng AFC’s underlying assets organized by the Shanghai Financial Court last month, the Shanghai-based carmaker said the same day. Following the acquisition, which is still subject to regulatory approval, SAIC will own two auto finance companies. The other is SAIC-GMAC Automotive Finance.
The acquisition is “conducive to the cooperation between both companies at the business level,” SAIC said. It will enable the automaker to provide a wide range of customer resources for Dongzheng AFC, the company added, noting that it also will help SAIC to develop its auto finance business.
SAIC’s shares [SHA: 600104] rose 1.6 percent today to finish at CNY16.80 (USD2.52) each. Dongzheng AFC [HKG: 2718] suspended trading yesterday, after closing at HKD1 (13 US cents) on May 18. The stock has risen as much as 40 percent since the auction was launched on April 16.
Founded in 2015, Shanghai-based Dongzheng AFC is one of China’s 25 authorized car finance providers and was focused on providing financial services to its then-controlling shareholder, auto dealer China Zhengtong Auto Services Holdings, SAIC noted.
Dongzheng AFC was put up for auction after the Shanghai branch of the China Banking and Insurance Regulatory Commission ruled that Zhengtong Auto Services was to sell all of its assets in Dongzheng AFC as it improperly obtained approval to set up the firm by improper means and used the unit as a channel to pump interest back to the parent company through various related-party transactions.
Dongzheng AFC’s revenue slumped more than 45 percent to CNY316 million (USD47 million) last year. It also made a net loss was CNY840 million, versus a net profit of CNY54.98 million (USD8.2 million) in 2021.
Shares of Zhengtong Auto Services [HKG: 1728] closed 3.7 percent higher today at 56 Hong Kong cents (7 US cents).
Editor: Tang Shihua, Futura Costaglione