China Unicom, the second largest mobile carrier in China, has announced that it has managed to bring in $12 billion in private investment from companies such as Alibaba and Tencent by issuing shares. China Life Insurance will acquire a 10.22% stake of the company, while Tencent and Baidu will have 5.18% and 3.3% of the shares respectively.
The deal is the biggest that has ever occurred under China’s mixed-ownership reforms. The increase in mixed-ownership in China has been driven by various factors including the country's ongoing supply-side reform, the Belt and Road Initiative, and many Chinese companies’ “going global” strategy, as well as the “Made in China 2025” plan.
As part of the deal, the investors will hold a 35.2% stake in China United Network Communications Ltd, China Unicom’s Shanghai-list unit, and be allotted three board seats. The deal should be wrapped up by the end of the year according to Lu Yimin, president of China Unicom Hong Kong.
According to a filing, Unicom said:
“Through the implementation of the Mixed Ownership Reform Plan by way of a combination of non-public offering and other methods, Unicom A Share Company expects to raise funds of not more than RMB 61.725 billon, and intends to use the net proceeds, through China United Network Communications Corporation Limited, for upgrading 4G capabilities, technology validation and enablement of 5G network related technologies, launch trial programs in relation to the 5G network and develop innovative businesses, so as to further enhance the core [competitiveness] of Unicom A Share Company and speed up its strategic transformation.”
As a consequence of the deal, China Unicom group’s holding will fall to 36.7% from 62.7%.
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