China's Fosun to offload stakes in four firms for 6.7b yuan

FOSUN International will exit its stake in four firms for a combined 6.7 billion yuan (S$1.3 billion) to prop up its general working capital, the debt-laden Chinese conglomerate said on Thursday (Jan 5).

The company owns resorts brand Club Med, among other assets. It will be offloading 25.7 per cent of Tianjin Jianlong Iron & Steel Industrial, as well as 26.7 per cent each of Beijing Northern Jianlong Industrial, Jianlong Steel Holdings and Janeboat Holdings.

Fosun said the share sale “will enable the group to focus more resources on key development strategies and key projects”.

In the last few months, the conglomerate and its units cut stakes in firms such as New China Life Insurance, Zhaojin Mining Industry and Shanghai Yuyuan Tourist Mart Group. Reuters reported in November that the company is seeking to offload a minority stake in Alibaba’s logistics arm Cainiao, in a deal that could fetch up to US$1 billion.

Fosun is among a handful of Chinese conglomerates that rapidly expanded their business empires at home and overseas in the past decade, mainly via debt-fuelled asset acquisitions. Such acquisitions included luxury hotels, retail brands and football clubs.

But the cost of servicing those debts has jumped sharply in recent years, as the conglomerates’ businesses slowed along with the Chinese economy. This has forced them to explore the sale of some of those assets to bolster their balance sheets. REUTERS