China's Rail Company CRRC Acquires 13.9% Stake in Singapore's Vallianz
Singapore's Vallianz Holdings Limited (Vallianz or Company, and together with its subsidiaries, the Group), an established provider of offshore support vessels and integrated marine solutions to the oil and gas industry, has entered into a subscription agreement with CSR Zhuzhou Electric Locomotive Research Institute (Hong Kong) Co., Limited and CRRC (Hong Kong) Co. Limited, both of which are subsidiaries of CRRC Corporation Limited (CRRC) that will bring in a total investment sum of $16.58 million (SGD 23.65 million) for Vallianz (the Proposed Investment).
China’s state-owned CRRC is the world’s largest supplier of rail transit equipment with the most complete product lines and leading technologies.
Pursuant to the subscription agreement, the two subsidiaries of CRRC shall subscribe for an aggregate of 550 million new ordinary shares in Vallianz at $0.3014 (SGD 0.43) per share. The new ordinary shares issued to CRRC will be subject to a moratorium period of one year from the date of completion of the Proposed Investment. Both of Vallianz’s major shareholders, Swiber Holdings Limited (Swiber) and Rawabi Company Holding Limited (Rawabi), have undertaken to observe a similar moratorium period of one year on their existing shareholdings.
Upon completion of the proposed transaction, CRRC shall emerge as a substantial shareholder of Vallianz with equity interest of approximately 13.9 percent in the Company’s enlarged share capital. Together, Swiber, Rawabi and CRRC will have a combined shareholding of 53.6 percent in Vallianz. CRRC will also be entitled to a seat on Vallianz’s board of directors.
Ling Yong Wah, CEO of Vallianz said, “We are honored that a major China state-owned corporation like CRRC is demonstrating its confidence in the Group’s business and our future prospects by taking a substantial equity stake in Vallianz.”
Added Ling, “Being a leading player in the global rail equipment industry, CRRC has developed sophisticated systems of international standards. Given the scale and geographical reach of our vessel operations, Vallianz will be able to provide an ideal platform for CRRC to extend the applications of its technologies and products into the global offshore and marine market.
At the same time, we view CRRC as a strategic technology partner who can enhance the Group’s vessel operations. By leveraging on CRRC’s diesel electric technology, the Group will be able to gradually move towards wider use of more environmentally-friendly vessels utilizing electric propulsion systems. This will help to raise our vessels’ fuel efficiency and yield cost savings for customers.”
Jiang Yi, deputy general manager of CRRC Zhuzhou Electric Locomotive Research Institute Co. Ltd. said, “We identified Vallianz as the company possessing the capabilities to become our strategic partner and to help CRRC realize our plans to expand into the offshore and marine sector. Vallianz is an established owner and operator of offshore support vessels with a wide geographical reach as it serves national and international oil companies in Asia Pacific, Middle East and Latin America. Together with its track record, in-house shipbuilding and design capabilities, we are confident that Vallianz can pave the way for CRRC to penetrate a new customer segment and showcase our offshore and marine technologies to the world.”
Listed on the Hong Kong and Shanghai stock exchanges, CRRC is a leading enterprise in China’s rolling stock industry. As at Jan. 22, CRRC has a market capitalization of $41.2 million (HKD 321.50 billion). CRRC Zhuzhou Electric Locomotive Research Institute Co., Ltd. is one of the three key enterprises within CRRC Group, and the parent company of CSR Zhuzhou Electric Locomotive Research Institute (Hong Kong) Co., Limited which is one of the investors in the Proposed Investment. The CRRC Group provides drive and control products for the world’s most advanced high-speed electric multiple unit (EMU), high-power locomotives, urban rail vehicles as well as diesel-electric and control equipment for vessels.
Said Sheikh Abdulaziz Alturki, group chairman of Rawabi, “As China companies are actively seeking strong partners to expand their presence in the global marketplace, the Proposed Investment is a resounding vote of confidence in Vallianz. Given CRRC’s impressive history and advanced technologies, we look forward to collaborating closely with them to develop Vallianz into one of the world’s leading offshore marine services providers.”
Francis Wong, CEO of Swiber said, “As strategic shareholders, Swiber and Rawabi take a long-term view of Vallianz’s growth potential and remain confident of Vallianz’s prospects despite the current market situation.”
Said Clifford Lee, Managing Director & Head of Fixed Income, Treasury & Markets, DBS Bank Ltd., “We are very pleased with Vallianz’s success in attracting such a world class company, it bodes well for all stakeholders involved.” DBS acted as advisor to Vallianz for this transaction.
The Proposed Investment is subject to the completion of due diligence among other conditions in the subscription agreement. The Group intends to use the proceeds from the Proposed Investment for general working capital needs.
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