10.07.2020

XCMG completes transition to Mixed-Ownership

Chinese crane and construction equipment manufacturer XCMG has completed the process to convert it from a wholly owned state enterprise to a mixed ownership corporation.

As of this month it is now officially listed as a mixed ownership state run enterprise with cross-shareholding and collectively owned capital as well as state owned capital. details on the level of private ownership have not been released but we do know that around nine percent of XCMG construction machinery Co Ltd - which is listed on the Shenzhen exchange - is owned by a number of domestic and overseas funds through trusts – including Black Rock, Harvest, The Vanguard Group, the Florida State Board of Administration and Norges Bank Investment Management.

The plan is list the entire group on an international exchange within the next two to three years. Revenues are in the region of $8.52 billion with a pre-tax profit last year if $591 million.

The business, based in Xuzhou, Jiangsu, Chin, was owned by the city government of Xuzhou. Then in 2005 private equity firm The Carlyle Group today agreed to purchase an 85 percent stake for $375 million in cash. However objections that the local government was selling it too cheaply, followed a series of attempts to block the deal, resulting in a failure to gain regulatory or government approval, even after Carlyle made several attempt to make the acquisition more palatable. It is was finally abandoned in 2008 as the recession hit.

Vertikal Comment

This has been a long time coming, and it seems that every time XCMG looks to move towards the private sector a global crisis comes along. The company has a long long way to go to become a true private company. It recently restated its mission to support the state and the party principles.