Japanese corporation Itochu Corporation and Thai conglomerate Charoen Pokphand Group are to jointly acquire a 20% stake in Hong Kong-listed financial services firm, CITIC Limited, for approximately HK$80 billion (US$10.4 billion), according to a company announcement.
The investment will be made through a joint investment vehicle, Chia Tai Bright Investment Company Limited, of which Itochu and Charoen Pokphand each holds 50%.
The deal is structured in two transactions. First, the joint venture will purchase 2.49 billion shares of CITIC Limited, which is equivalent to 10% of its total share base, for US$4.54 billion from CITIC Group Corporation, a state-owned entity which currently owns around 78% of CITIC Limited.
Secondly, CITIC Limited will issue 3.328 billion convertible preferred shares to the joint venture for US$5.9 billion in cash.
For both transactions, the agreed price per share or per convertible preferred share is set at HK$13.80 per unit.
Upon the completion of the two transactions, the joint venture will hold around 20% of shares of CITIC Limited. CITIC Group will remain as the controlling shareholder.
The joint venture will have the right to nominate one non-executive director and one independent non-executive director to the board of CITIC Limited.
CITIC Limited says the proceeds will be used to further develop its businesses and to invest in emerging opportunities in fast-growing sectors in China.
The three parties have also entered into a strategic cooperation agreement to work together across sectors and countries, says the statement without elaborating.
The investment follows a US$1.9 billion share swap deal between Itochu and Charoen Pokphand in July, 2014.
In 2011, Itochu also invested around US$100 million in a Hong Kong asset management arm of CITIC Group.