China’s Shenzhen Airlines is to receive an initial capital injection for a proposed equity financing, following the selection of a candidate investor identified as Shenzhen Kunhang Investment Partnership.
Kunhang Investment is a Chinese enterprise controlled by the state-owned assets supervision commission of the Shenzhen municipal government.
Air China already holds 51% of Shenzhen Airlines and is prepared to maintain this level of ownership through a balancing injection of capital. Shenzhen International Logistics currently has the remaining 49%.
Shenzhen Airlines had initiated a public solicitation of investors in September, with Kunhang the only eligible participant.
Kunhang will hold just over 20.9% of Shenzhen Airlines’ equity once the financing transaction is complete. Shenzhen International Logistics will retain about 28.1%.
The investment from Kunhang will amount to CNY2 billion ($284 million).
Air China will contribute about CNY2.08 billion. It points out that the financing “will not result in a change of control” over Shenzhen Airlines, and it will remain an Air China subsidiary.
Shenzhen Airlines’ original proposal in August, says Air China, featured an equity financing totalling CNY16 billion.
