Huatai Financial assisted in the privatization of China Huarong’s subsidiaries

On 18 November, 2020, Huarong International Financial Holdings Limited (“HRIF” or the “Offeror”, Stock Code: 993.HK) privatized Huarong Investment Stock Corporation Limited (“HRIV”, Original Stock Code: 2277.HK) by way of a scheme of arrangement (the “Transaction”). HRIF and HRIV were both Hong Kong listed companies owned by China Huarong Asset Management Co., Ltd. (“China Huarong”, Stock Code: 2799.HK) providing a wide range of financial services. The Transaction was completed by way of share exchange offer without cash alternative. Huatai International acted as financial adviser for the offeror, leading the scheme design and execution of the Transaction.

As the sole financial adviser of HRIF, Huatai International has led the works of scheme design, deal execution, shareholder communication, controlled and monitored the whole privatization procedure. Huatai International successfully solved a series of challenging issues and completed the Transaction in a remarkable position.

 

Huatai International has successfully solved a series of challenging issues via rigorous argumentation and design:

 

1. The Transaction required votes from shareholders of both HRIF and HRIV, making the pricing challenging as to strike a balance between both sides’ interest
2. The Transaction was a share exchange offer without cash alternative, which may be less attractive for offeree’s shareholders to vote for the transaction
3. The minority shareholders of HRIF and HRIV were relatively dispersed, which increased the difficulty of lobbying and shareholder communication
4. There were a large number of duplicated registered shareholders, increasing the uncertainty of voting
5. HRIF and HRIV were controlled by the same group of substantial shareholders, which is challenging in avoiding conflict of interest
6. Waiver application is required for potential special transactions arising from an issuance of bond by major shareholders during the transaction period