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Mainland Public Utilities Provider Goes Global through Hong Kong

Shanghai Dazhong Public Utilities group has issued an IPO on the Hong Kong Stock Exchange to pursue a dual listing strategy for extending its international reach

Shanghai Dazhong Public Utilities (Group) Co. Ltd. (DZUG) was founded in 1991, and it listed on the Shanghai Stock Exchange in 1993. It is a constituent of, among others, Dow Jones China Index. In the past two decades or so, it has grown into Shanghai’s leading public utilities provider, with its gas supply business serving two million end users and owning more than 6,000 kilometers of underground pipelines. Its business also spans sewage treatment, infrastructure projects and transportation. In search of opportunities for further growth, it is planning to use Hong Kong as the platform to “go global”.

Mainland Public Utilities Provider Goes Global through Hong Kong

“Hong Kong is an international market and has close relationships with major markets overseas. At the same time, it has a well-regulated regime and a mature capital market,” DZUG President, Leon JW Liang, said.

In November 2008, DZUG set up a wholly owned subsidiary in Hong Kong, Dazhong (Hong Kong) International Corporation Limited, to conduct business in gas supply and transportation, as well as some investments in the financial sector. In December 2016, DZUG issued an HK$1.7 billion H-share initial public offering (IPO) on the Hong Kong Stock Exchange. It has joined the rank of A-share listed Mainland enterprises coming to Hong Kong for a dual listing to extend their global reach.

“DZUG will continue the strategy of focusing on public utilities as its core business, with financial innovation as its auxiliary business. More investment will be made in public utilities. Thirty-five percent of the capital generated from the IPO will be invested in pipeline gas supply business, 30 percent in sewage treatment business, 25 percent in other public utilities business, and 10 percent will be used as working capital. DZUG will continue to take advantage of Hong Kong’s capital market to further its investing and financing activities,” Liang said.

With the Belt and Road initiative going full steam ahead, DZUG sees Hong Kong’s role becoming more important to its global expansion in the future. “Hong Kong has a long history of trading with countries along the Maritime Silk Road, and an understanding of these countries’ law and culture. DZUG will conduct thorough research into opportunities brought about by Belt and Road, with the aim of driving the growth of our business,” Liang said.

Dazhong (Hong Kong) has a staff of five, with three of them being locals. The company has recently moved into a new office in the International Commerce Centre and plans to tap the talent pool of Hong Kong this year to add five more to the headcount.

“Hong Kong has a rich pool of talent. DZUG intends to recruit talent in the public utilities sector, especially those familiar with the gas industry and sewage treatment industry, and those with experience in dealing with overseas capital markets,” Liang concluded.

Thursday, March 30, 2017

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Fast Facts

  • Shanghai’s leading public utilities provider, with its gas supply business serving two million end users
  • Listed on the Shanghai Stock Exchange and a constituent of Dow Jones China Index
  • Issued an IPO on the Hong Kong Stock Exchange in December 2016 to pursue a dual listing strategy

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