Talks to boost M&As in North China
By Sun Min (China Daily)
Updated: 2004-04-01 08:50

Tianjin Property Right Trading Centre, a major property right exchange, is in talks with some foreign investment banks on the trading of assets and equities of non-listed companies in North China.

These foreign companies, including Citigroup and Morgan Stanley, want to apply the platform of the Tianjin exchange to conduct acquisition of local enterprises' assets and equities, said Fang Jianguo, deputy director of the exchange.

While they are currently negotiating, it is still premature to predict the structure the co-operation and how much would be invested, he said.

Earlier reports have stated that Citigroup wanted to get a membership with the Tianjin centre to facilitate its acquisitions.

Citigroup China declined to comment on the matter.

It is estimated that many State-owned enterprises (SOEs) are located in North China and the Northeastern industrial base. The majority are restructuring to improve efficiency and some are seeking foreign investors.

Tianjin Property Right Trading Centre was recently designated by the State-owned Assets Supervision and Administration Commission (SASAC) for transaction of State-owned property rights in the central and biggest SOEs.

Also getting such licenses are the equity exchanges in Beijing and Shanghai, SASAC sources said.

SASAC issued a regulation in January, asking domestic companies, except for financial and listed companies, to enter designated property right exchanges to transact State-owned equities and assets.

To implement the reform, SASAC has launched an investigation into around 170 assets and equities exchanges across the country, checking their qualifications and clearing up irregularities, a SASAC spokesman said.

Some of them may be merged after the adjustment, while the qualified ones will further expand.

The commission has also strengthened supervision on enterprises selling State-owned assets and equities to avoid losses and abuse of power.

Presently, an industrial association of the property right exchanges is also under preparation, led by a few bigger ones, like Tianjin and Shanghai, said Fang.

That is expected to boost partnership and information sharing between all the exchanges, which is limited now.

As for Tianjin, its property right market is expanding rapidly as demands increase.

Dai Xianglong, mayor of Tianjin and the former central bank governor, is keen on the expansion project of the Tianjin Property Right Trading Centre and has promised financial and policy support.

"We now have more than 90 members, including investment companies, State-asset management companies and intermediaries like accounting firms, rating agencies and law firms," said Fang.

"We hope we can have more members as the market grows," he said.

The centre has opened an express channel for foreign investors interested in purchasing local assets and equities, listing about 30 projects that they want to present to foreign investment.

Some of them have already found satisfactory buyers, Fang said.

Domestic private investors are also encouraged to take part.

The centre realized a property right transaction of 15.1 billion yuan (US$182.3 million) in 2003.

 It will move into a bigger, five-story building soon, which will involve an investment of around 70 million yuan (US$8.5 million).

Tianjin was also a founder of the property right market union in 2002, which gathered together 16 property right exchanges in Northern and Northeastern provinces and municipalities and enabled sharing of information and resources.

The union recorded a 17 billion yuan (US$2 billion) transaction last year.

But to further improve the overall market liquidity and efficiency, China still needs more detailed regulations that set unified standards and procedures for property right transactions, said Fang.

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