Greenland to take controlling stake in KKR-backed Rundong Auto

Greenland currently holds 32 million shares in Rundong or a 3% stake. It will buy 536 million newly issued shares, increasing its stake to 30%. This, combined with the 30% stake held by Rundong Fortune, which is acting in concert with Greenland, will give the two firms a majority position, according to a stock market filing.

KKR's shares will not be affected by the transaction. The PE firm owns 280 million shares, which it purchased in four separate rounds from December 2010 to November 2011 for a total of $100 million. At the time, the shares represented a 33.8% stake, though the newly shares issued in the company's 2014 IPO diluted KKR's holding to 26%.

Founded in 1998, Rundong targets the luxury car market. In 2014, 73% of the company's sales were of premium brands such as BMW, Maserati, Lexus and Audi, while mid-to-high end brands such as Buick, Hyundai, Ford and Nissan represented just 27% of sales.

The company reported $2.5 million in revenue for the year ended December 2014, up from $11.6 million in 2013. Net profit increased from $40 million in 2013 to $50 million in 2014.

Greenland Group, a state-owned enterprise based in Shanghai, is primarily engaged in property development. It develops industrial and business complexes, along with high-rise buildings in urban centers. The group is also involved in the coal and oil industries in various capacities, including production, storage, and transportation.

Upon the close of the transaction, Rundong will change its name to China Greenland Rundong Auto Group.

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• Topics
• Greater China
• Consumer
• Restructuring
• PIPEs
• KKR
• China
• automobiles
• Consumer
• PIPE
• manufacturing