Chinese state-owned steel trading platform raises $291m
Ouyeel, which claims to be China’s largest online-to-offline (O2O) trading platform for the steel industry, has raised RMB2 billion ($291 million) in Series B funding at a post-deal valuation of RMB10 billion.
Contributions came from the China Structural Reform Fund, CITIC Securities and China Merchants Ventures, as well as several strategic investors. They include logistics specialist Sinotrans, Taiyuan Iron & Steel Group, Beijing Jianlong Heavy Industry Group, Guangxi Shenglong Metallurgy, and construction and infrastructure conglomerate Yancheng Haixing Group.
Hina Group, which advised on the deal, said in a statement that the participation of these financial and strategic investors was part of China's mixed ownership reform initiative, whereby private investors buy stakes in state-owned enterprises (SOEs) with a view to helping them improve operational efficiency. This is also one of the goals of the China Structural Reform Fund.
Ouyeel was established in 2015 by Baowu Group – the product of a merger between Baosteel Group and Wuhan Iron & Steel Group – with several affiliate entities and Benxi Steel Group and CCB Trust coming in as anchor shareholders. A Series A in 2017, described as the first phase of ownership reform, saw RMB1 billion invested. Mitsui & Co. and GLP were among the foreign investors. Following the Series B, Baowu's stake has fallen to 60%.
The platform combines e-commerce and bulk commodities trading, offering a range of transaction brokering, financial, technical and logistics services. The new funding will go towards the infrastructure construction, IT applications, and integration with other platforms, the statement added. Ouyeel facilitated transactions involving 118 million tons of steel products in 2018, while gross merchandise value (GMV) exceeded RMB100 billion.
There is one notable independent trading platform for the steel industry. Zhaogang has gone through five funding rounds since its establishment in 2012, achieving a valuation of more than RMB17 billion. It filed for a Hong Kong IPO last year. The company had a registered customer base of 106,000 in 2017 and posted a GMV of RMB60 billion.
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