August 29 2002 – China’s southern city of Shenzhen will sell part of its stake in five major state enterprises, including energy, water and gas companies, by international tender, Mayor Yu Youjun said on Wednesday.
Shenzhen would invite foreigners to bid for minority stakes in Shenzhen Energy Group Co Ltd, Shenzhen Water (Group) Co Ltd, Shenzhen Gas Group Co Ltd and Shenzhen Public Transportation (Group) Ltd, Yu told a conference in Shenzhen.
It would also sell stakes of 30 and 40 per cent in the Shenzhen Food General Corp to two foreign companies, Yu said.
“As most of the five companies are in key industries where the government still imposes price control on products, their controlling stakes will remain in the hands of the Chinese side,” Yu told the conference.
Many Chinese state-owned enterprises need money to restructure and deal with increasing foreign competition as the country prises open its sheltered economy after joining the World Trade Organisation late last year.
Authorities had been reluctant to invite foreign investment into key sectors, such as utilities, in fear that losing control of such firms would damage economic stability and affect the daily lives of its 1.3 billion people.
Yu said the international tenders would operate on a trial basis, but did not say whether other sales would follow.
Yu said the city would begin to evaluate the firms’ assets and select preliminary foreign candidates in August and September. The final buyers and sales agreements would be decided in October and November.
The deals would be completed by the end of the year, he said.
The municipal government planned to sell 25 per cent of Shenzhen Energy, 45 per cent of Shenzhen Water, 24 per cent of Shenzhen Gas and 45 per cent of Shenzhen Public Transportation, he said.
Morgan Stanley-invested China International Capital Corp was appointed the lead adviser for the asset sales.
The five companies are highly profitable and would be attractive to foreign investors, Yu said but gave no details on the value of planned sales.