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Legend aims at getting listed

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2009-09-09 17:02

Legend holdings is looking to get a listing in the future, China Business News (CBN) said, citing Liu Chuanzhi, the new company chairman.

Legend has been making strenuous efforts including its new round of restructuring for its own and for its subsidiaries' listing, the newspaper said.

The latest big move was when China Oceanwide Holdings Group, a private investment firm, bought a 29 percent stake in Legend for 2.76 billion yuan ($404 million) on Tuesday, deemed by some as an effort by Legend to meet the Hong Kong Stock Exchange listing requirements.

The deal, said to be Legend's first time in introducing private investment, made Oceanwide Legend's third largest shareholder.

Legend's new round of restructuring would improve its governance structure which will lay a foundation for setting up its new incentive mechanism and next generation of management, Liu told CBN.

Related readings:  Legend to invest 10b yuan over five years  China Oceanwide buys 29% stake in Lenovo parent Legend  Liu Chuanzhi picked as Legend Holdings' chairman

"We plan to invest 10 billion yuan in the next five years to purchase core assets of large scales," Liu said, cited by the paper. "Legend holdings will be listed and these core assets will follow its step of listing gradually," he said.

"Getting listed can help us raise more money and improve the level of the company's operation," Liu was told the Oriental Morning Post in an interview. He also expects the move of going public will create a long-term incentive mechanism for Legend's management team.

Liu said a subsidiary company going public with its parent is not permitted on the mainland, but is not banned in Hong Kong, according to the Post's report.

The company therefore is inclined to get listed in Hong Kong in the future but it has to meet the requirement that shares held by public shareholders are not less than 25 percent, meaning the company should finish diversifying its equity before going public, the Post said.

But Legend has to wait until all of its subsidiaries are listed, according to the Post. Two of Legend's subsidiaries have already been listed — Lenovo Group and Digital China Holdings — both Hong Kong-listed. The other four yet to go public are Legend Capital, Hony Capital, Raycom Real Estate Development Co and the newly founded company which would handle Legend's direct investment business, the Post reported.

Legend's decision of starting its own direct investment was revealed on Tuesday, despite two of its subsidiary companies, Legend Capital and Hony Capital, already running the business.

Raycom Real Estate Development would prefer to get listed on the mainland's A-share market, the Post said. The company had packed assets under its name into the shareholding company in the second half of 2008 in a bid to go public as a whole in 2010, the Post said, citing earlier reports.

It will still take some time for Legend to go public since its subsidiaries Legend Capital and Hony Capital are not industry-related and have had much difficulty in getting listed, the Post said. In a bid to go public as a whole, Legend would increase its core capital by direct investment and purchasing, and focus mainly on clean energy and environmental protection, new materials, high-tech, financial services and consumer goods, according to the Post's report.

CBN reported Legend's investment would cover every growth stage of its target company and decisions would be made independently between it and its subsidiaries, but they would share experiences, business opportunities and social networks.

Its new round of share-reform started in 2002, when the Chinese Academy of Sciences (CAS) began to help it find proper shareholders, Deng Maicun, general manager of CAS Holdings told CBN.

Deng also said executives of CAS holdings and Legend have met with several investors in the past seven years but failed to make any agreement because Legend had strict requirements on its new shareholders in order to fuel its future development.

Oceanwide could have the chance to buy into Legend because it was willing to pave the road for Legend's share-reform, Deng said, cited by the Post.