Financial services platform to help SOEs get rid of debts
China Reform’s arm to boost financials via several entities
China Reform Holdings Corp Ltd, a State conglomerate that specializes in the restructuring and recapitalization of State-owned enterprises, is planning to boost its financial arm to help clear the debts of State-owned enterprises and increase their efficiency.
The company will accelerate the establishment of a comprehensive financial services platform, including a financial firm to help SOEs pay off debts and raise funds; a factoring entity to improve SOEs’ cash flow; an online financing platform; and an insurance brokerage to help SOEs manage risks.
The plan was revealed in the company’s latest prospectus for its 3 billion yuan ($435 million) bond offering. The proceeds from the bond sales will be used to pay debt and replenish the cash flow gaps of its subsidiaries.
In the prospectus, the firm laid out its future business plans, especially including boosting its venture capital investment in strategic emerging industries, such as high-tech and innovative sectors, to facilitate industrial upgrading of the SOEs.
Xu Hongcai, director of the economic research department at the China Center for International Economic Exchanges, said the move to set up a comprehensive financial platform would strengthen the financial capacity of China Reform Holdings and increase the synergy with its subsidiaries in various sectors.
“It will broaden capital source and enrich the means for it to consolidate and optimize the value of SOE assets,” he said.
The plan to boost the company’s financial services capability also underscores the government’s intention to rely on financial means and tools to deepen the reform of the country’s SOEs, Xu added.
China Reform Holdings was established in 2010, as the government accelerated the restructuring of SOEs.
Wholly owned by the State-owned Asset Supervision and Administration Commission, the conglomerate has 93 subsidiaries in sectors ranging from mining to financial services and telecommunications.
The total asset of China Reform Holdings exceeded 150 billion yuan as of the end of last year. It reported profits of 4.5 billion yuan in 2015, according to its website.
In 2015, the firm set up a private equity investment entity to facilitate SOEs’ overseas investment.
It will broaden ... the means for it to consolidate and optimize the value of SOE assets.” Xu Hongcai, director of the economic research department at the China Center for International Economic Exchanges