Chinese company Fosun Int’l, in debt, to reduce its shares in Fosun Pharma, Jinhui Liquor

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(Yicai Global) Sept. 5 — Fosun International plans to trim its stakes in Fosun Pharmaceutical and Jinhui Liquor. As part of a plan to raise more than 10 billion yuan ($1.4 billion), the heavily indebted Chinese conglomerate has been selling stakes in listed companies since the start of the year.

A statement released by Fosun Pharma on September 2 did not specify any reason for the divestment, and the Shanghai-based drugmaker did not respond to inquiries from Yicai Global.

Shanghai Fosun High Technology Group, a subsidiary of Fosun International, plans to sell more than 80 million shares of Fosun Pharma, or 3% of total share capital, through centralized tenders and block exchanges .

It is the first time Fosun International has reduced its stake in Fosun Pharma since the drugmaker’s Shanghai IPO in 1998. But it will not affect Fosun International’s majority shareholder status.

Fosun Pharma Shares [SHA:600196] fell from the daily trading limit by 10% to close at CNY36.19 ($5.22) apiece today, while its Hong Kong-listed stock [HKG:2196] ended down 13 at 21.85 HKD (2.78 USD).

The market is concerned about Fosun International’s debt situation, although the Shanghai-based company says it is operating stably.

It had debt of CNY261.1 billion ($37.7 billion) as of June 30, up from CNY237.1 billion at the end of last year, according to its latest earnings report. The company cited business expansion as the cause. Its debt ratio reached 56.8%, 3 percentage points higher than at the end of 2021.

Fosun International has sold stakes in Hainan Mining, Tsingtao Brewery and Zhongshan Public Utilities Group since early 2022. It also sold US insurer AmeriTrust in April.

Now he also plans to reduce his stake in Jinhui Liquor. Yuyuan Tourist Mart, a subsidiary of Fosun International, and an entity acting in concert with it plan to reduce their stake in the “baijiu” maker by nearly 66 million shares, or 13% of the total share capital.

After the sale, Yatter Investment Group will be the majority shareholder of Jinhui Liquor. Yatter Investment is headed by Li Ming, a wealthy businessman from Gansu province. In May 2020, Fosun International spent 1.8 billion CNY (259.7 million USD) to buy the majority stake in Jinhui Liquor from Li.

Jinhui Liquor Shares [SHA:603919] closed up 2.4% today at CNY27.85 ($4.02) per share.

Publisher: Tom Litting

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