how to carry out the intensive cleanup of central and state-owned enterprises in a smooth and orderly manner
2024-08-29
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china economic weekly reporter xie wei | beijing report
the central enterprises are “refunding” again.
in early august, two wholly-owned subsidiaries of china poly group transferred 100% of the equity of their microfinance companies. information disclosed by the guangzhou equity exchange showed that poly south group co., ltd. and poly investment holding co., ltd. jointly transferred 200 million shares of guangzhou poly microfinance co., ltd., accounting for 100% of the total share capital, with a transfer floor price of approximately 281 million yuan.
in june, the state-owned assets supervision and administration commission of the state council held a meeting and made two requirements for central enterprises' involvement in financial business: strictly control the increase, and in principle, central enterprises are not allowed to establish, acquire, or newly invest in various financial institutions; in principle, financial institutions that have little effect in serving their main industrial businesses and have greater risk spillovers are not allowed to invest in or increase their holdings... this is called the "withdrawal order" by the industry.
today, the impact of this policy is gradually becoming apparent.
the process of equity transfer of central enterprises and state-owned financial enterprises has accelerated
after the "fund withdrawal order" was issued, many central enterprises and state-owned enterprises began to transfer their financial equity holdings and accelerated the divestment of financial assets.
on july 22, china telecom's tianyi e-commerce simultaneously listed the equity of its three subsidiaries, namely, online microfinance, financing guarantee, and orange insurance agency, for sale, with a total asset transfer of 998 million yuan. in the same month, sinochem capital co., ltd. once again listed the transfer of its 12.384 million shares in jiangtai insurance brokerage after reducing the price twice.
in june, beijing supply and marketing cooperative investment management center once again listed the transfer of 400 million shares of beijing life insurance it held on the beijing equity exchange, accounting for 13.986% of the total share capital, with a transfer floor price of 818 million yuan.
public information shows that in the first half of the year, at least 17 shareholders of central and state-owned enterprises have listed the transfer of their financial equity holdings, involving various types of institutions such as banks, securities companies, and insurance companies.
in fact, since the second half of last year, many financial equity transactions under central enterprises have appeared on equity trading platforms in various places, with many transactions reaching hundreds of millions of yuan.
bengang group co., ltd., a subsidiary of anshan iron and steel group, listed for transfer 108 million shares of benxi bank, with a transfer floor price of 132 million yuan; china shipbuilding industry corporation and jiangnan shipyard (group) co., ltd. listed for transfer a total of 8.8 million shares of huatai insurance, with a transfer floor price of 102 million yuan; datang group finance co., ltd. listed for transfer 900 million shares of fudian bank, with a transfer floor price of approximately 3.204 billion yuan; hubei energy and three gorges capital, subsidiaries of the three gorges group, transferred their 15.6% stake in changjiang securities to changjiang industrial investment; cofco corporation and cofco biotech co., ltd. listed for transfer 38.1075 million shares and 40.3095 million shares of huishang bank respectively.
focusing on main responsibilities and businesses, financial market order is better
behind the central and state-owned enterprises selling off their shares in insurance companies is the regulatory authorities' consideration of strengthening supervision of central enterprises' financial business and preventing and controlling financial risks.
tian lihui, dean of the financial development research institute of nankai university, told a reporter from china economic weekly that the "fund withdrawal order" is aimed at optimizing the country's capital layout and enhancing the core competitiveness of central enterprises. the intention behind this policy is to hope that central enterprises can focus on their main business and reduce non-core business activities in the financial field, thereby improving overall operational efficiency, optimizing the allocation of state-owned assets, and regulating financial order.
the relevant requirements of the "refund order" are also consistent with the previous series of policies.
the "three-year action plan for soe reform (2020-2022)" issued in 2020 requires central enterprises and state-owned enterprises to focus on their main responsibilities and businesses and vigorously develop the real economy. in 2023, the sasac made it clear that in implementing a new round of soe reform and deepening and upgrading actions, more attention should be paid to the core function of state-owned enterprises in serving national strategies. on this basis, the state-owned assets supervision and administration commission of the state council issued the "interim measures for the management of state-owned enterprises' equity participation", which gradually refined the provisions on non-core business equity participation of state-owned enterprises.
in february this year, the sasac held the first special promotion meeting for the 2024 action plan to deepen and enhance the reform of state-owned enterprises, and made it clear that it would actively carry out the relevant disposal and clearance work of the "two non-compliant" and "two assets".
it is worth noting that the relevant policies did not stop the financial business activities of central enterprises and state-owned enterprises, but instead implemented restrictions on new businesses and provided directional guidance for future development.
"the main purpose of the policy is to allow central enterprises to gradually withdraw from non-core financial activities, rather than a complete ban on financial business. central enterprises can still retain and develop financial businesses that are closely related to their core businesses," tian lihui said bluntly.
dong ximiao, chief researcher of china unionpay financial services, told a reporter from china economic weekly that the term "withdrawal order" is not accurate. the relevant policy does not mean to force all central enterprises to withdraw from financial business, but rather advocates a more rational and prudent business strategy.
dong ximiao analyzed that some trust companies, financial companies, commercial factoring companies, private equity investment funds, etc. invested and established by central enterprises have been relatively weak in corporate governance, product issuance, risk management, investor rights protection, etc. in recent years, and there are certain risks.
"the financial subsidiaries of central enterprises have the dual roles of 'member units of group companies' and 'member units of the financial industry'. therefore, these enterprises are subject to dual supervision, and strict supervision is essential." dong ximiao said that appropriately withdrawing from some financial fields will not only help prevent financial risks, but also help focus on the main responsibilities and businesses of central enterprises.
"exit" is not easy, where are the buyers?
however, achieving a quick and smooth exit is not easy, and it is common to find it difficult to find buyers for the shares sold.
on july 17, china coal group shanxi huayu energy co., ltd. (hereinafter referred to as "china coal huayu energy") listed its 140 million shares of shanxi shanyin rural commercial bank (hereinafter referred to as "shanyin rural commercial bank") for the third time on the shanghai united equity exchange, accounting for 20% of the total share capital of shanyin rural commercial bank. this part of the equity has been listed on the shanghai united equity exchange for many consecutive times since september 2023, and the transfer floor price has gradually dropped from 188 million yuan to 146 million yuan, but no buyer has been found.
huatai insurance, which had the largest number of shareholders among domestic insurance companies at the beginning of its establishment, is facing a concentrated transfer of shareholders' equity.
on july 3, china general nuclear power group co., ltd. transferred its 6.6 million shares of huatai insurance at the beijing equity exchange, with a minimum transfer price of 72.3716 million yuan. at the end of 2023, lucky film co., ltd. listed its 22 million shares of huatai insurance, which were priced at 269 million yuan. in january this year, lucky film listed the shares for the second time, and the listing price was lowered to 243 million yuan.
wu fei, a professor at the shanghai advanced institute of finance, shanghai jiao tong university, said that under the "fund withdrawal order" of central enterprises, the first to be affected are the financial institutions involved in liquidation and transfer, especially small and medium-sized financial institutions, which will in turn have an impact on the entire financial market at a certain stage.
wu fei believes that who will take over these financial equity and assets sold by central enterprises and state-owned enterprises, who can take over, when to take over, and at what price? these factors will affect the price of equity, capital chain, and operational stability.
on the one hand, the transfer amount of these financial equity targets is high, and on the other hand, the qualification requirements for the buyer are also high. therefore, although the clearance action is accelerating, it can be expected that there is still a long way to go in terms of execution difficulty and completion time.
"although there are certain challenges in finding buyers, such equity is generally attractive considering the scarcity of financial licenses and the profit potential of the financial business itself." tian lihui said that other state-owned enterprises, private enterprises, foreign institutions, etc. may become potential buyers of these financial equity.
(this article was published in china economic weekly, issue 16, 2024)
