Yangzijiang Shipbuilding's shareholders set to vote on spinning off fund management arm for an SGX listing.

The spin-off is expected to have a market capitalization of S$4.26 billion ($3.14 billion) after the planned listing, a company filing said. 

«By separating the shipbuilding business from the investment business, the proposed spin-off will enable the market to accord an appropriate value to each of the principal businesses currently held within the group, based on their respective performance and growth potential,» Yangzijiang Shipbuilding said. 

Acquiring fund management company

YZJFH also intends to acquire fund management company GEM Asset Management (GEM) for around S$3.3 million ($2.43 million), which will help it enter the fund/wealth management business. The step should allow it to distribute investment products and generate fee-based income. GEM had assets under management (AUM) of around S$58.3 million at end-December, the filing said.

YZJFH will shift its debt investment business to focus on fund investments for longer investment horizons, such as private debt and mezzanine funds under the investment management business in China, the filing said.

Key investment themes

Initially, the spin-off group’s portfolio will mainly be for fund investments in China, but over time the geographic mix is expected to be for Singapore and China to make up 50 percent each, the filing said. Investment opportunities in Asia’s emerging markets and in global developed markets will also be explored, the company added in the filing.

YZJFH’s key investment themes will be late-stage companies, including pre-initial public offering (IPO) companies, ESG, New Economy, real estate and opportunistic investments, including as IPO anchor investors and special situations, the filing said.

Yangzijiang Shipbuilding said the spin-off group was already negotiating on six fund management projects with third parties, including a private equity fund focused on control and growth companies as a LP, a fixed income fund for growth and tech companies as a co-GP, a real estate fund focused on U.K. student accommodation as a co-GP, two private equity funds — one for growth companies and one for «unicorn opportunities» — as a co-GP, and a PIPE/equity fund for absolute returns as a co-GP. 

Ownership of YZJFH

Yangzijiang Shipbuilding’s former Executive Chairman Ren Yuanlin will hold a deemed interest of 21.6 percent of YZJFH, the filing said. 

Sapphire Skye is expected to have a deemed interest of 10 percent, the filing said. Sapphire Skye is wholly owned by Zedra Trust Co. (Singapore), which is the trustee of Lido Trust, an employee benefit group for Yangzijiang, the filing said.

T. Rowe Price Associates is expected to hold a deemed interest of 7 percent and EDB Investments will hold 0.5 percent, while Chairman and CEO Ren Letian will hold a deemed 4.2 percent interest via Hengyuan Asset Investment, the filing said.

YZJFH said it plans to recommend a dividend policy of paying out at least 30 percent of the group’s net profit after tax, excluding exceptionals. 

Shareholders of Yangzijiang Shipbuilding are set to vote on the spinoff in an extraordinary general meeting (EGM) on 18 April. 

This item was originally published on «Shenton Wire.»