CITIC Group to list in Hong Kong by reversing into CITIC Pacific

BEIJING – China’s State-owned conglomerate, CITIC Group, is planning to list in Hong Kong by reversing into its CITIC Pacific unit.  CITIC Pacific has signed a framework agreement to acquire CITIC Ltd., the group’s operating arm with assets worth an estimated RMB 225 billion (end-2013). CITIC Pacific will issue an undisclosed number of shares at a price of HK$13.48 each, equivalent to a 6.5% premium on Monday’s close of HK$12.66, subject to a definitive agreement.

CITIC's businesses in China range from real estate to banking, securities, infrastructure, energy, natural resources, and engineering, among others, and it made a net profit of RMB 34 billion yuan in 2013. The deal will help bolster CITIC Pacific, which was bailed out by its parent after wrong-way currency bets led to a 2008 annual loss of HK$12.7 billion.

The company owns the Sino Iron project in Western Australia, a US$9.9 billion magnetite iron ore mine that made its first shipment in December after delays and cost overruns. The deal comes as President Xi Jinping advocates State-owned enterprise reform, including loosening yuan trading, allowing more private investments in State businesses, and increasing securitisation of national assets.