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HNA Cold Chain considering fundraise in 2H18 to fund M&A, source says
13 MAR 2018
HNA Cold Chain [NEEQ:831900], a Beijing, China-based cold chain logistics solutions provider, is considering a fundraise in 2H18 via a minority stake sale to finance its acquisition plans, a source familiar with the situation said.
The company would issue new shares for the fundraising and the size could be several hundreds of millions of CNY. It will work on the details closer to June, the source said.
HNA Cold Chain has an internal team reviewing potential targets both in China and overseas markets, like the US, Europe, Southeast Asia and Australia. Approaches from financial advisors with suitable targets in mind will be entertained, the source said.
It would take on board both strategic and financial investors, with companies having expertise in logistics and transport sectors highly regarded. The company is not likely to sell to overseas investors, as that could complicate any attempt to seek an initial public offering (IPO) in China in the future. A timeframe for the IPO is undecided, the source said.
The company has already been approached by several interested parties, but it does not plan to engage in formal negotiations until June, the source said.
Proceeds will be earmarked to fund HNA Cold Chain’s acquisitions to keep improving the company’s logistics network coverage, the source said.
It considers companies engaged in the provision of cold chain logistics, storage and warehousing services as potential targets, with companies that use its services for fresh agricultural produce and food considered ideal, the source said.
HNA Cold Chain will also look at companies that provide Internet of Things (IoT) solutions for cold chain businesses, like online remote monitoring devices that can provide live data on temperature and location of the transport fleet as well as warehousing, the source noted.
HNA Cold Chain acquired a 30% stake in Henan Bingxiong Refrigerated Truck, a special truck maker, and a 34% stake in Beijing Sino Supply Chain, a medical cold chain technology R&D and application company, for CNY 192m and CNY 154.55m, respectively in 2016, according to the company’s announcement.
Established in 1997, HNA Cold Chain provides cold chain services for fresh agricultural produce, seafood, frozen food, chemicals, and pharmaceutical drugs.
Nantong Square Cold Chain Equipment [SHA:603339] is a peer of HNA Cold Chain, a sector banker said. Nantong Square Cold Chain Equipment trades at a P/E ratio of 29x.
With total assets of CNY 2.68bn, HNA Cold Chain had revenues of CNY 953m and a net profit of CNY 17m in 1H17. Logistics services provider HNA Logistics Group is the company’s largest shareholder with a 40.66% stake, according to its 1H17 report.
HNA Logistics Group is a subsidiary of Hainan-based conglomerate HNA Group. As reported, HNA Group is selling various assets both domestically and overseas to resolve its financial problems.
Asked if HNA Group could put HNA Cold Chain’s shares up for sale, the source said as far as the company is concerned, HNA Group has no plans to divest the company at this stage.
HNA Cold Chain declined to comment.