Press Release
FCIB acted as independent financial advisor of the M&A transaction
FCIB acted as independent financial advisor to Liaoning Fu-an Heavy Industry Co., Ltd (hereinafter referred to as “Liaoning Fu-an” or “the Company”, Code: 603315.SH) on its acquisition of Liaoning Metallurgy Design Research Institute Co., Ltd (hereinafter referred to as “Design Institute” or “the Target”) via non-public offering and related-party transaction. The deal was officially closed on Aug 7th, 2019. Consideration of RMB 1,136.33 million was paid by non-public-issued shares priced at 13.05 RMB per share dedicated to original owners of the target –Liaoning Zhongke Environmental Monitoring Co., Ltd. Design Institute becomes a wholly-owned subsidiary of the Company after the transaction.
The main business of Liaoning Fu-an is large-scale steel castings for major technical equipment. The products are mainly divided into three categories: castings for thermal power equipment, castings for hydropower equipment and other castings for rail transit. For three consecutive years, Liaoning Fu-an has been awarded GE "Emerging Rapid Growth Award", "Best Supplier Award" and "Best Quality Award" respectively. It is one of the four major domestic large-scale steel castings manufacturing enterprises supporting thermal power. In recent years, due to the slowdown of domestic downstream industries market demand and the sluggish international market demand for steel castings, as well as the rising price of steel, the steel castings market of China has been gradually shrinking, and the operating performance of Liaoning Fu-an has declined to a great extent.
The Target's main business is the flue gas control engineering service and energy management engineering service. It is the only enterprise in Liaoning Province that simultaneously has the first-class qualification of environmental engineering (air pollution prevention and control engineering), the first-class qualification of municipal industry (thermal engineering) and the first-class qualification of environmental protection engineering contracting. Design Institute can provide customers with one-stop service from design to construction. Under the background that governments at different levels continue to strengthen environmental protection policies and regulations and vigorously promote the development of energy-saving and emission reduction industries, the industry of flue gas control and energy management has broad prospects.
The transaction gives rise to a conglomerate that focuses on both steel casting manufacturing and environmental protection market, which has stronger barriers to entry and greater prospects. With the help of the experience accumulated by Design Institute in energy management engineering services, both parties can effectively integrate their respective channel resources and enhance their overall market development ability. Liaoning Fu-an will further increase the investment in gas turbine design and assemblage, promote the integration and upgrading of its business, enrich the profit growth point, form a complete industrial chain from gas turbine design and assemblage to general contracting of distributed energy projects, increase the market influence, and further help to enhance profitability, sustainable operation ability and the value of the Company and provide shareholders with better returns.
FCIB, acting as the leading IFA, efficiently coordinated intermediary agencies; successfully assisted in the restructuring planning, full-scope due diligence and information disclosure; as well as obtained all the approvals from the authorities. This fully demonstrates FCIB’s strong execution capability and outstanding communications with regulators, and is highly appreciated by the client and the capital market.
