Case Study: Minority Acquisition of a Listed State-owned Enterprise in China

September 01, 2006 | BY

clpstaff

Listed state-owned enterprises (SOEs) present strategic foreign investors with attractive investment opportunities, as they seem to have a pricing advantage and better corporate governance compared with domestic private companies. However, what challenges are involved in acquiring a minority stake in a listed SOE?

By Toshiyuki Arai, Paul, Hastings, Janofsky & Walker LLP, Shanghai

Many state-owned enterprises (SOEs) in China are in dire need of modernizing manufacturing technology and corporate governance. Moreover, SOEs are often seeking to expand their distribution channels outside of China. In order for this to materialize, introducing a qualified foreign strategic investor seems to be a sensible option. For foreign strategic investors, not only do listed SOEs present China's largest opportunities for future growth, but in the broad scheme of things, they tend to have better corporate governance than private domestic companies and, until the share reform is completed, there seems to be a pricing advantage. Additionally, the exit strategy that was once ambiguous has now been clarified.

Acquiring soes in China

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