* Chinese state-backed firms to provide about $4 bln
* International investors to provide some $1 bln
* AIA, Qatar and Singapore sovereign wealth funds among
* Shareholders set to vote on the deal on June 3
(Recasts and adds details of fund raising throughout)
By Elzio Barreto
May 14 China's CITIC Pacific Ltd said
it had secured $5.1 billion to help fund the purchase of some
$36 billion in assets from its state-owned parent company, as
strategic investors lined up to give the landmark deal their
The deal, which is essentially the injection of CITIC Group
Corp's main operating business into the Hong
Kong-listed company, is part of a wide-ranging reform of China's
The fifteen strategic investors funding the deal include a
group of Chinese state-backed entities purchasing about $4.1
billion worth of shares and overseas investors buying about $1
billion, the company said late on Wednesday.
China's National Social Security Fund will be the biggest
investor, agreeing to buy HK$16.8 billion ($2.2 billion) of
shares. Insurer AIA Group Ltd is buying $300 million,
while sovereign wealth funds Qatar Holding and Singapore's
Temasek Holdings will contribute $200 million and $100
Japan's Tokio Marine Holdings and Mizuho Bank
will also contribute $100 million each.
CITIC Pacific's independent financial advisor said the terms
and conditions of the deal were "fair and reasonable" and its
independent board panel recommended it to shareholders.
Assets being acquired include stakes in several large
financial services businesses such as CITIC Bank
and CITIC Securities ,
as well as a holding in CITIC Heavy Industry and
others in real estate, natural resources and telecommunications.
Funding for the huge asset purchase will also include a
stock issue worth 177.01 billion yuan ($28.4 billion) by CITIC
Pacific to CITIC Group at a price of HK$13.48 per share, on top
of the cash portion raised from the strategic investors.
The deal needs to be approved at a shareholders' meeting on
June 3, and is expected to be completed by Aug. 29. The company
also plans to change its name to CITIC Ltd.
CITIC Pacific had initially planned to sell $8.1 billion
worth of shares to strategic investors to comply with Hong
Kong's requirement for a 25 percent minimum free float, but it
was able to secure a waiver to the rule for a lower 15 percent
CITIC Pacific's shares were up 0.4 percent at HK$13.96 on
Thursday, in line with the benchmark Hang Seng index.
They have risen 15 percent since late March when the company
unveiled plans to buy the assets.
CITIC Group, China's oldest and biggest financial
conglomerate, was established in 1979 by Rong Yiren, one of the
few industrialists to stay on in the mainland after the 1949
revolution. The company was set up with the support of former
leader Deng Xiaoping, and has 11 stock market-listed entities.
The asset purchase will give a much-needed boost to CITIC
Pacific after it miscalculated the huge cost of developing a
mine in Western Australia.
($1 = 7.7519 Hong Kong Dollars)
($1 = 6.2289 Chinese Yuan)
(Additional reporting by Anne Marie Roantree and Denny Thomas;
Editing by Edwina Gibbs)