CEFC China in long line of Chinese M&A titans

By Zhuan Ti | China Daily | Updated: 2016-09-05 08:46

A man works at ZDAS, a Czech steel engineering company acquired by CEFC China Energy Co Ltd. Photos Provided to China Daily

Shanghai-based CEFC China Energy Co Ltd's acquisition of the Czech steel producer ZDAS, which has an annual sales revenue of nearly 1.3 billion euros ($1.5 billion), was recently approved by the Czech antitrust office. The acquisition includes not only the purchase of ZDAS, but also its machinery manufacturing enterprise TS Plzen and one of its branches in Germany.

With a history of about 50 years, ZDAS is a first-class iron and metallurgy engineering company in Europe.

The acquisition is one of China's largest investment projects in the Czech Republic.

The strategy is in keeping with the aggressive overseas merger and acquisition tactics adopted by Chinese companies in recent years. According to statistics from Thompson Reuters, Chinese companies have so far this year announced about 300 merger and acquisition deals, totaling more than $100 billion, which is close to last year's total.

Located in the heart of Europe, the Czech Republic plays a crucial role as the bridge between Europe and Asia, having an influence on Western Europe, Central Europe and Russia. It is China's second-largest trading partner in Central and Eastern Europe, and China is the Czech Republic's largest trading partner outside the European Union.

CEFC China, which currently ranks 229th on the Fortune Global 500 list, has invested more than 10 billion yuan ($1.5 billion) in the Czech Republic and is China's biggest investor there.

To promote the Belt and Road Initiative, the company has built a second headquarters in the country, expanding its finance, manufacturing, tourism and air transportation businesses.

At the Sino-Czech economic and trade roundtable on March 30 in Prague, CEFC China signed contracts to acquire ZDAS and purchase a 50 percent stake in J&T Finance Group, becoming the first Chinese private company to control a European bank.

It also became a shareholder in Travel Service, the second-largest airline in the Czech Republic, with the aim of making Prague a European air transport hub, which would also make it easier for Chinese companies to enter the European market.

In the energy sector, CEFC China has agreed to acquire 51 percent of KMG International, which has an industry chain covering oil storage, refinery and sales, owning more than 2,000 gas stations in Spain, France and Romania.

"Following the Belt and Road Initiative, CEFC China will build the downstream and terminal oil and gas stations in Europe, and its upstream businesses will be in Central Asia, the Middle East and Africa," said Ye Jianming, CEFC China's chairman of the board. "The terminals in Europe will connect Central Asia, the Middle East and Russia."

He said CEFC China has established branches in several European countries and also its European headquarters in the Czech Republic and its Eurasian headquarters in Georgia.

This is, however, just part of CEFC China's plan. It has also purchased Le Palais, a renowned luxury five-star boutique hotel located in the center of Prague, as well as brewer Pivovary Lobkowicz Group. CEFC China now has diversified business interests throughout Europe, and has even branched into sports.

One of the Czech Republic's leading soccer teams, SK Slavia Praha, was on the brink of bankruptcy before it was acquired by CEFC China last year. Now, thanks to the company's investment, the club's fans are looking to the future with renewed optimism.

"Keeping promises and paying attention to the emotional bond are some of the main reasons for CEFC China and many other Chinese companies to successfully expand overseas and win the recognition of local administrations and people," said Chen Qiutu, president of the company.

CEFC China's investments in the Czech Republic appear to have spawned further opportunities with Georgia inviting cooperation with the company in areas such as power facilities and postal savings banks. It has also agreed to cooperate with Bulgaria in telecommunications, power grids, airport construction and infrastructure.

zhuanti@chinadaily.com.cn

Public face of a private firm

CEFC China Energy Co Ltd is a private collective enterprise with energy and financial services as its core business. The company was established by Ye Jianming in 2002 and holds shares and controling interests in several foreign public companies. It has a workforce of nearly 30,000.

With expanding international economic cooperation in the energy sector as its strategy, CEFC China seeks to establish a well-organized international investment bank through its operations and investment in the energy sector.

CEFC China has been actively exploring and plotting the possible future development path for private enterprises. It has injected its core values into its corporate culture based on the business philosophy of "arising with strength and achieving with goodness".

Its innovative corporate governance model is reflected by a system that combines strategic and financial control from its headquarters with partnership systems at its subsidiaries. The model aims to promote core business, talent professionalism, asset securitization and refined management.

The company saw its revenue exceed 263.1 billion yuan ($39.5 billion) last year, and it placed 229th on its third consecutive appearance in the Fortune Global 500 this year. It has also been recognized with a number of awards and titles, including the World's 500 Most Influential Brands, Asia's 500 Most Influential Brands, Most Influential Chinese Enterprises and Top 10 Most Internationally Competitive Chinese Enterprises.