rongsheng investment made in china

HONG KONG (Reuters) - Jiangsu Rongsheng Heavy Industries Co Ltd has appointed Morgan Stanleyand JP Morganto finalize plans for its long-awaited IPO in Hong Kong, aiming to raise up to $1.5 billion in the fourth quarter, sources told Reuters on Tuesday.

This is Rongsheng’s latest bid to go public after it failed to raise more than $2 billion from a planned IPO in Hong Kong in 2008, mainly as a result of the global financial crisis.

Rongsheng"s early main shareholders included an Asia investment arm of Goldman Sachs, U.S. hedge fund D.E. Shaw and New Horizon, a China fund founded by the son of Chinese Premier Wen Jiabao.

The three investors sold off their stakes in Rongsheng for a profit early this year, said the sources familiar with the situation. Representatives for the banks, funds and Rongsheng all declined to comment.

Rongsheng’s revived IPO plan comes at a challenging time. Smaller domestic rival, New Century Shipbuilding, slashed its Singapore IPO in half last week, planning to raise up to $560 million from the originally planned $1.24 billion due to weak market conditions.

Given uncertainty in the global shipbuilding business environment as well as growing concerns over a huge flow of fund-raising events in Hong Kong, investment bankers suggest the potential size for Rongsheng could be $1 billion to $1.5 billion, according to the sources.

Rongsheng is seeking to tap capital markets to fund fast growth and aims to catch up with bigger state-owned rivals such as Guangzhou Shipyard International Co Ltd.

Rongsheng won a $484 million deal to build four ships for Oman Shipping Co last year. The vessels would carry exports from an iron ore pellet plant in northern Oman which is expected to begin production in the second half of 2010.

Established in 1989 and located at Xiaoshan, Hangzhou, Zhejiang Rongsheng Holding Group Co Ltd has developed into a modern business group that excels in areas such as petrochemicals, chemical fibers, real estate and financial investment. It ranks 176th on the list of China’s Top 500 Enterprises, and 34th in China Top 100 Private Enterprises.

In the real estate industry, the group has established two major sectors: Shengyuan Real Estate and Ningbo United. Combining real estate development and the leisure industry, Rongsheng has successfully developed several classic projects such as Xianghu No 1, Liangzhu Cutural Park.

In financial investment, Rongsheng has invested in several commercial financial institutions, and actively engaged in the fields of modern medical treatment, bulk commodities and intellectualization.

Rongsheng group has established several listed companies, including Rongsheng Petrochemical and Ningbo United, covering the petrochemical and real estate industries.

Rongsheng insists on innovative development. Currently, the group has built various technological and scientific innovation platforms such as high-tech research and development centers, a workstation for academicians and experts, an enterprise technology center and a post-doctorate science and research workstation.

Cooperative relationships with Zhejiang University, Zhejiang Sci-Tech University and Tianjin Polytechnic University have been formed. A research and development (R&D) team was also established, gathering experts from many countries and regions. In recent years, Rongsheng group has made fruitful achievements in developing new products and new technology.

(Bloomberg) — China Rongsheng Heavy Industries Group Holdings Ltd., once the country’s largest private shipyard, said it will not proceed with a proposed warrant sale after a potential investor who pledged as much as HK$3.2 billion ($413 million) was detained.

Wang Ping, owner of private-equity firm Kingwin Victory Investment Ltd., was detained last month on criminal allegations unrelated to the deal, according to people with knowledge of the matter. They asked not to be named because the move hasn’t been made public.

Wang’s detention occurred days before China Rongsheng shareholders are to meet March 13 to vote on the investment by Kingwin Victory. The firm agreed in October to pay at least HK$510 million for warrants Rongsheng is selling, and its total investment could reach HK$3.2 billion.

Rongsheng “has no information as to the details of the incident and has been unable to contact Mr. Wang Ping, which casts doubt” on Kingwin Victory’s ability to follow through on the investment by the March 31 deadline, Rongsheng said Wednesday in a statement to the Hong Kong Exchange.

Rongsheng has run into financial trouble amid competition with state-owned yards that have government backing and easier access to financing. The company is also seeking investment in its Jiangsu shipyard and bought a stake in an oilfield in Kyrgyzstan as part of efforts to restructure its business.

Shanghai-based Rongsheng said last August it’s entering the energy business and is issuing new shares so it can buy a 60 percent stake in a Kyrgyzstan oilfield. It later said it’s seeking to identify new investment opportunities outside China, including in Central Asia.

Chinese shipbuilder Jiangsu Rongsheng Heavy Industries has raised about HKD$14bn ($1.8bn) in its initial public offering on the Hong Kong stock exchange.

Rongsheng will use part of the sale proceeds to fund its shipbuilding and offshore engineering businesses, and to repay loans, according to lloydslist.com.

Overall, the epidemic will hit China"s economy in the short term. In the first 2 months of this year, the total retail sales of social consumer goods reached only 5213 billion yuan, down 20.5% year on year in nominal terms (a 23.7% decrease in real terms after deducting price factors), and the investment in fixed assets (excluding rural households) fell 24.5% year on year. However, according to the information released by the National Bureau of Statistics on March 23, despite the impact of the epidemic on all walks of life, China"s economy is still on a long‐term growth path. On the one hand, due to the Spring Festival, weather and other reasons, the main indicators of production, supply and demand, import and export, investment, and so on from January to February account for a small proportion of the total amount of the whole year. On the other hand, because the total economic volume of the second half of the year usually accounts for 55%, the first half of the year accounts for 45%, and the first quarter only accounts for about 20%. So as long as the economic recovery accelerates after the second quarter, we will have the opportunity to make up for the economic losses during January and February.

] These demands will be released gradually after the epidemic, and even the consumption rebound phenomenon would appear. In addition, relatively speaking, the impact of domestic import and export in the first quarter was not significant. In the first 2 months of this year, the total import value and export value decreased by 4% and 17.2% respectively year on year. Import was unaffected while export was slightly affected, but compared with the slowdown and stagnation of the overall domestic economy, it can be ignored. In combination with various situations, the state needs to issue relevant policies to stabilize economic growth from the perspective of consumption and investment, support small and medium‐sized enterprises, encourage enterprise production and stimulate overall consumption.

In addition, investment and consumption have always been the main driving force for China"s economic development. In terms of investment, first of all, we should focus on the smooth implementation of major projects to ensure the completion of the target tasks. Second, the government can attract social capital to participate in 5G base station, industrial Internet, artificial intelligence and other new infrastructure projects by expanding the scale of special debt, developing political credit finance, and other ways to ensure that infrastructure investment continues to play important role in stabilizing GDP growth. Stimulating residents to expand consumption is also a key way to enhance economy recovery. On the one hand, people"s constrained and repressed consumption desire has gradually rebounded with the improvement of the epidemic situation; on the other hand, some regional governments have taken measures such as issuing consumption coupons to further stimulate the consumer end, which is undoubtedly a “strong shot” in the arm for enterprises.

In the second scenario, although the epidemic situation in China has been under control in the second quarter, the spreading of foreign epidemic situation has seriously affected China"s import and export, and most of the domestic commodities have to be exported for domestic sale. In 2019, China"s total import and export of goods reached 31.6 trillion yuan, an increase of 3.4% year on year. According to the forecast by the Prediction Science Research Center of the Chinese Academy of Sciences on January 8, 2020, it is estimated that China"s GDP growth rate will be about 6.1% in 2020, among which consumption, investment, and net export will drive 4.4%, 1.4%, and 0.3% of GDP growth respectively, and the trade surplus is about $411.4 billion. According to the situation of previous years, there is little difference in the total value of import and export in each quarter. Suppose that the net export in the third quarter of 2020 accounts for 1/4 of the annual net export, that is, the GDP output value is about $102.85 billion.

Abu Dhabi National Oil Company (ADNOC) has signed a broad framework agreement with China’s Rongsheng Petrochemical to explore domestic and international growth opportunities in support of ADNOC’s 2030 growth strategy.

The companies will examine opportunities in the sale of refined products from ADNOC to Rongsheng, downstream investment opportunities in both China and the United Arab Emirates (UAE) and the supply of liquified natural gas (LNG) to Rongsheng.

Under the terms of the deal, the companies will also study chances to increasing the volume and variety of refined product sales to Rongsheng as well as ADNOC’s participation as the China firm’s strategic partner in refinery and petrochemical projects. This could include an investment in Rongsheng’s downstream complex.

In return, Rongsheng will also look at investing in ADNOC’s downstream industrial ecosystem in Ruwais, UAE, including a proposed gasoline-to-aromatics plant as well as reviewing the potential for ADNOC to supply LNG to Rongsheng for use within its own complexes in China.

Sultan Al Jaber, the UAE’s minister of state, who is also CEO of ADNOC, said the agreement has the potential to open new markets for its growing portfolio of products and attract investment to support our downstream and gas expansion plans.

Rongsheng’s chairman Li Shuirong added that the cooperation will ensure that its project, which will have a refining capacity of up to 1 million bbl/day of crude oil, has adequate supplies of feedstock.

This company operates as a holding firm for a group of subsidiaries engaged in polyester, spinning, false-twisting, coal chemicals, real estate, venture investment business activities. It was incorporated in 2006 and has its registered office in Hangzhou, China. As a holding company, it handles the administrative affairs and services and grants management services to its subsidiaries, as well as provides financial support and control function for the board. Furthermore, the firm is responsible for managing the group and its overall legal structure, tax planning, financial and equity structures. It is also in -charge in various matters relating to policy, strategic planning, marketing, selecting and manning senior management positions, approving investments and budgets, and the overall ongoing monitoring of the group"s performance.

By Adam Jourdan and Keith Wallis RUGAO, China/SINGAPORE (Reuters) - Deserted flats and boarded-up shops in the Yangtze river town of Changqingcun serve as a blunt reminder of the area"s reliance on China Rongsheng Heavy Industries Group <1101.HK>, the country"s biggest private shipbuilder. Like Rongsheng"s shipyards, the area is struggling to survive. The shipbuilder this week predicted a substantial annual loss, just months after appealing to the government for financial help as it reeled from industry overcapacity and shrinking orders. Rongsheng lost an annual record 572.6 million yuan ($92 million) last year, and lost 1.3 billion yuan in the first half of this year. The company has become a test of China"s market reforms. While Beijing seems intent to promote a shift away from an investment-heavy model, with companies reliant on government cash injections, some analysts say Rongsheng is too big for China to let fail. As ship orders and funding have dried up, the firm has delayed deliveries and now faces legal disputes, shipping and legal sources said. The company - whose market value has slumped more than 90 percent to around $1 billion since its Hong Kong listing in late 2010 - is in talks with bankers to restructure its debt. Local media reported in July that Rongsheng had laid off as many as 8,000 workers as demand slowed. Three years ago, the company had about 20,000 staff and contract employees. This week, the shipbuilder said an unspecified number of workers had been made redundant this year. GHOST TOWN The local community, on the outskirts of the eastern Chinese city of Nantong, has mirrored Rongsheng"s fall. A purpose-built town near the shipyard"s main gate, with thousands of flats, supermarkets and restaurants, is largely deserted. Nine of every 10 shops are boarded up; the police station and hospital are locked. "In this area we"re only really selling to workers from the shipyard. If they"re not here who do we sell to?" said one of the few remaining shopkeepers, surnamed Sui, playing a videogame at his work-wear store. "I know people with salaries held back and they can"t pay for things. I can"t continue if things stay the same." In the shadow of the shipyard gate, workers told Reuters the facility was still operating but morale was low, activity was slowing with the lack of new orders and some payments to workers had been delayed. "Without new orders it"s hard to see how operations can continue," said one worker wearing oil-spattered overalls and a Rongsheng hardhat, adding he was still waiting to be paid for September. He didn"t want to give his name as he feared he could lose his job. The uncertainty isn"t only at the yard. "Morale in the office is quite low, since we don"t know what is the plan," said a Rongsheng executive, who declined to be named as he is not authorized to speak to the media. "We have been getting orders but can"t seem to get construction loans from banks to build these projects." A company spokesman said the shipyard had no confirmed new orders in the second half of the year. RIVALS DOING BETTER While Rongsheng has won just two orders this year, state-backed rival Shanghai Waigaoqiao Shipbuilding <600648.SS> has secured 50, according to shipbroker data. Singapore-listed Yangzijiang Shipbuilding has won more than $1 billion in new orders and is moving into offshore jack-up rig construction, noted Jon Windham, head industrials analyst at Barclays in Hong Kong. Some Rongsheng customers say the company is behind schedule in delivering ships. Frontline, a shipping company controlled by Norwegian business tycoon John Fredriksen, ordered two oil tankers from Rongsheng in 2010 for delivery earlier this year. It now expects to receive both of them in 2014, Frontline CEO Jens Martin Jensen told Reuters. Greek shipowner DryShips Inc has also questioned whether other large tankers on order will be delivered. DryShips said Rongsheng is building 43 percent of the Suezmax vessels - tankers up to 200,000 deadweight tons - in the current global order book. That"s equivalent to 23 ships, according to Rongsheng data. Speaking at a quarterly results briefing last month, DryShips Chief Financial Officer Ziad Nakhleh said Rongsheng was "a yard that, as we stated before, is facing difficulties and, as such, we believe there is a high probability they will not be delivered." DryShips has four dry cargo vessels on order at the Chinese firm. Rongsheng declined to comment on the Dryships order, citing client confidentiality. "For other orders on hand, our delivery plan is still ongoing," a spokesman said. At least two law firms in Shanghai and Singapore are acting for shipowners seeking compensation from Rongsheng for late or cancelled orders. "I"m now dealing with several cases against Rongsheng," said Lawrence Chen, senior partner at law firm Wintell & Co in Shanghai. RISING DEBT Billionaire Zhang Zhirong, who founded Rongsheng in 2005 and is the shipyard"s biggest shareholder, last month announced plans to privatize Hong Kong-listed Glorious Property Holdings <0845.HK> in a HK$4.57 billion ($589.45 million) deal - a move analysts said could raise money to plug Rongsheng"s debts. The shipbuilder"s net debt to equity, a measure of indebtedness, climbed to 134 percent in January-June from 119 percent in 2012 and 85 percent in 2011. Talks with its banking syndicate are ongoing, with no indication when a deal could be struck, a person at one of the banks told Reuters this week. Meanwhile, Rongsheng"s shipyard woes have already pushed many people away from nearby centers, and others said they would have to go if things don"t pick up. Some said they hoped the local government might step in with financial support. The Rugao government did not respond to requests for comment on whether it would lend financial or other support to Rongsheng. Annual reports show Rongsheng has received state subsidies in the past three years. "We have no further elaboration on government assistance and bank negotiations," a Rongsheng spokesman said on Friday. The exodus has left row upon row of deserted apartments, with just a few old garments strewn on the floor and empty name tags to show for what was a bustling community before China"s economic growth began to slow and credit tightened at a time when global shipping, too, turned down. In a local lottery shop, workers sat around smoking as they waited to see if their luck was in. "The lottery has become increasingly popular," said a girl working the till. "I"m not sure why really, but perhaps people are hoping they can win something here." ($1 = 7.7529 Hong Kong dollars) (Editing by Emily Kaiser and Ian Geoghegan)