A signing ceremony between China CNR Corporation Limited and Shanghai Electric Group in Beijing last month. [Provided to China Daily]
China CNR Corporation Limited (CNR), a leading provider of locomotive and rolling stocks, hopes to develop its urban rail business with the acquisition of a 50 percent stake in a Shanghai train manufacturer.
The deal signed late last month agreed that China CNR will buy 44.79 percent equity in Shanghai Rail Traffic Equipment Development Co (SRTE) from Shanghai Electric Group for 365 million yuan . CNR will then inject 85 million yuan that will result in it owning half of SRTE.
The company hopes to accelerate its access to urban rail operations, and to increase its competitiveness. CNR has won contracts to supply bullet trains for the high-speed railway line between Shanghai and Beijing, but currently takes less than five percent of its business from urban rail.
On completion of the transaction Shanghai Electric's holding will be reduced to 34.91 percent and Shanghai Electric's controlling shareholder, Shanghai Electric (Group) Corp, will own the remaining 15.09 percent.
SRTE was established in 2003. Its main businesses include design, manufacture, sale, leasing, maintenance for rail vehicles and parts, electromechanical integration of rail transportation equipment, and project contracting. China's urban rail sector is a growth area, expected to be a total length of 4,500 km by 2020.