China Unicom, a telecommunications group based in the world’s most populous country, intends to raise $11.7 billion that will be used to undertake a revitalization plan. About a dozen investors are being eyed by the state-owned enterprises and this includes Chinese tech giants such as Tencent Holdings and Alibaba Group. The deal is slated to be concluded before the year ends.
This will be the biggest capital raising deal in the region since AIA, an insurer, made a market debut seven years ago. It is also the largest deal in the recent past as China undertakes ‘mixed-ownership’ reforms where the government intends to use private capital to rejuvenate state-owned companies.
The ‘mixed-ownership’ guidelines were revealed two years and China Unicom is one of the first among the state companies that are set to be reformed this way. Other state companies that have been selected to participate in the pilot program include China State Shipbuilding Corp and China Southern Power Grid.
The board of China United Network Communications Ltd, which is the unit of China Unicom that is listed on the Shanghai exchange, has given an approval for the issuance of shares to investors including JD.com, a Chinese e-commerce firm, and Baidu, the Chinese online search giant. Other major firms which have shown interest and agreed to make an investment in the Chinese telecommunications giant include Kuang-Chi Group, a technology conglomerate based in Shenzhen, China and ride-hailing firm DiDi Chuxing. China Life Insurance has also agreed to invest.
Fresh set of ideas
According to China Unicom Hong Kong, the Hong Kong unit of China Unicom, a 35.2% stake in China United Network Communications Ltd will be reserved for the investors who will also get three seats on the board. Through the mixed-ownership reforms it is expected that China Unicom, as well as the other state-owned firms will benefit from an injection of fresh ideas and a more entrepreneurial attitude.
“The mixed ownership will raise the innovation capability of the company … allowing us to transform from a traditional operation to an integrated operator,” said the president of the Hong Kong unit of China Unicom, Lu Yimin.