Yangzijiang diversifying to investment business amid shipbuilding slump

Jun 30, 2016

Yangzijiang diversifying to investment business amid shipbuilding slump

China’s Yangzijiang Shipbuilding has established a non-state-owned investment holding firm in Jiangsu province to provide the group with an alternative source of income, amid the tough shipbuilding market.

The Chinese shipbuilder said its wholly-owned Jiangsu Yangzijiang Shipbuilding (JYS) has partnered Hodo Group, Shagang Group and GCL Group to form Jiangsu Non-state-owned Investment Holding Co (JNIHC). JYS has invested RMB1bn ($150.7m) for a 11.63% equity interest in JNIHC.

“The objective of JNIHC is to render assistance to most of the Jiangsu enterprises to deal with the problem during the process of transformation and upgrading as well as mergers and acquisitions, such as dispersion of investment behaviour, insufficient use of financial leverage, limited sources of information and relative weak capability of carrying out cross-border mergers and acquisition,” Yangzijiang said.

JNIHC will establish a number of buyout funds and industrial investment funds to assist in the consolidation of traditional industries and growing industry, as well as to support the emerging industry, and participate in restructuring of state-owned enterprises.

“The board believes that the joint venture will also provide an alternative source of income from this investment,” Singapore-listed Yangzijiang added.

The severe slump in the shipbuilding sector has prompted Yangzijiang to diversify its business. The shipbuilder, however, has managed to stay profitable with a first quarter profit of RMB448m, down 37% year-on-year.

Ren Yuanlin, executive chairman of Yangzijiang, has led the company on a number of turns in the past several years, as seen from the company shying away from its core shipbuilding business at the onset of the 2008 global financial crisis by sizing up its held-to-maturity and micro-financing businesses, before refocusing on shipbuilding in mid-2014.

Recently, Yangzijiang is again looking to expand its finance business portfolio with the latest set up of JNIHC, as well as the investment in Nanjing Saiyang Equity Investment Enterprise in January 2016 and acquiring a stake in Chinese financial leasing firm ZLPFL in November 2015.

Source from : Seatrade Global

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