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State investors may take BMW China partner private: sources

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The deal to take Brilliance private would be led by state-controlled Liaoning Provincial Transportation Investment Group.

Hong Kong

CHINESE state-backed investors are considering taking BMW's main Chinese joint-venture partner Brilliance private, sources told Reuters, in the latest such deal targeting beaten down Hong Kong-listed stocks.

Brilliance China Automotive Holdings has a market value of US$4.6 billion and the deal to take it private would be led by state-controlled Liaoning Provincial Transportation Investment Group, which owns 12 per cent of Brilliance, said the sources.

The privatisation would attract other Chinese state-backed investors and could kick off as soon as the fourth quarter of the year.

Brilliance's parent, Huachen Automotive Group, said it had not obtained any relevant information about Liaoning Provincial Transportation Investment Group considering leading the deal to take Brilliance private.

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The parties involved did not immediately respond to requests for comment.

Based in Shenyang city of northeastern Liaoning province, Brilliance is 30 per cent owned by Huachen Group, which is majority-owned by the provincial state asset regulator.

The regulator supports the proposal and the Liaoning Provincial Transportation Investment Group has talked to several banks about financing, said some sources.

The move comes ahead of BMW buying another 25 per cent to take control of the JV - BMW Brilliance Automotive (BBA) - for 3.6 billion euros (S$5.8 billion) in 2022 under new ownership rules for foreign carmakers.

Based on that offer, Brilliance's current 50 per cent stake in the venture, which contributed to almost all the listed firm's profit in 2019, would be worth 7.2 billion euros, 83 per cent higher than its market value. Its stake will halve to 25 per cent. REUTERS

 

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