China’s air-conditioner manufacturing giant Gree Electric Appliances Inc saw a 5.35 percent surge to 60.8 yuan ($8.64) per share after its stock trading resumed on Tuesday following the company’s ownership shake-up.
Zhuhai Gree Group Co Ltd, controlling shareholder of Gree Electric, signed an equity transfer agreement to sell a 15 percent stake to an investment firm, according to a notice from the company posted on the Shenzhen Stock Exchange yesterday.
Zhuhai Mingjun Investment Partnership, an investment fund backed by Hillhouse Capital, acquired the stake at a price of 46.17 yuan ($6.56) per share, totaling 41.66 billion yuan. The move makes Hillhouse Capital the largest shareholder of Gree Electric, The Beijing News reported.
After the change in equity, there will be no controlling shareholder or actual controller of Gree Electric, the report said. The top three shareholders of the company (excluding Shenzhen-Hong Kong Stock Connect) are Zhuhai Mingjun (15 percent), Hebei Jinghai Guarantee Investment Co Ltd (8.91 percent), and Zhuhai Gree Group (3.22 percent).
Gree Electric’s reform into a company with diversified shareholders is expected to solve the problems of governance structure and management equity incentives, which suppress the company’s valuation. The significant increase in incentives also will bring long-term stability to the company’s management and substantial rise in the dividend rate, Guotai Junan Securities said.
At the same time, the company is expected to realize joint shareholding by major shareholders, company management and core dealers, further strengthening the interests of channels and the company, as well as promoting the progress of channel upgrades, the securities broker said.