Chinese state-backed PE fund anchors Foxconn IPO
A private equity fund backed by China’s State Development & Investment Corporation (SDIC) is the largest strategic investor in the RMB27.1 billion ($4.3 billion) Shanghai IPO of a Foxconn Technology Group manufacturing unit.
Foxconn Industrial Internet (FII) will sell 1.97 billion shares for RMB13.77 apiece in what is expected to be mainland China's largest listing in three years. A total of 20 strategic investors will cover 30% of the offering, including several government-related investment entities, state-owned asset managers, and corporates such as Alibaba Group, Baidu, and Tencent Holdings.
Shanghai SDIC Joint Development Equity Investment Fund will buy 72.5 million shares, according to a filing. SDIC has its own fund management entity, which manages capital for a wide range of investors, including the National Council for Social Security Fund (NSSF), financial institutions, and state-owned enterprises (SOEs). It is responsible for the Future Industry Investment Fund, a RMB20 billion vehicle that focuses on advanced manufacturing.
A further 43.6 million shares will be split equally between an SDIC-owned smart technology unit and the China Mobile Innovation Industry Fund, which was formed by China Mobile and SDIC. It had initial capital of RMB5 billion.
Other sizeable commitments will come from Central Huijin, which is responsible for China Investment Corporation's domestic holdings, China Life Insurance, and the China Structural Reform Fund. The latter vehicle – launched in 2016 with a target of RMB350 billion – is intended to boost SOE competitiveness. Meanwhile, Alibaba, Baidu, and Tencent will each buy 21.8 million shares.
Taiwan-headquartered Foxconn, which is also known as Hon Hai Precision Industry, is the world's largest contract manufacturer and counts Apple as one of its major customers. FII produces communication network equipment, cloud computing devices, precision tools, industrial robots, and big data-driven smart manufacturing solutions.
Foxconn has made numerous investments intended to help develop its advanced manufacturing capabilities. These include committing $236 million to SoftBank's robotics business alongside Alibaba, and backing Maxnerva Technology Services, a systems integration specialist focused on introducing cloud computing, big data, and artificial intelligence to manufacturing.
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