LiuGong Group Signs Strategic Investor Agreements for Mixed-Ownership Reform
December 8, 2020 marked a key milestone for Guangxi Liugong Group Co., Ltd. (“LiuGong Group”). The enterprise held a strategic investor signing ceremony for its mixed-ownership reform project in the Grand Metro Park Hotel in Nanning, China.
LiuGong Group and seven strategic investors signed capital increase, share expansion, and equity transfer agreements totaling 3.192 billion CNY of Guangxi Liugong Machinery Group Co. Ltd. (“LiuGong Machinery”). An employee stock ownership plan was also implemented, which raised another 223 million CNY in capital from 1,274 key employees. The mixed-ownership reform project raised a total of 3.415 billion CNY in capital. Under the new capital structure, 51% of LiuGong Machinery is owned by LiuGong Group, 45.8% is owned by external investors, and 3.2% is owned by employees. The active participation of strategic investors reflects broad stakeholder confidence in LiuGong’s achievements over its 62 year history, as well as its future potential. LiuGong Group’s mixed-ownership reform project was one of the largest in 2020, and serves as an industry benchmark for similar reforms in the construction manufacturing industry in recent years.
“This mixed-ownership reform project is one of the most important we’ve undertaken since the establishment of our first factory in 1958,” said Zeng Guang’an. “It represents a major opportunity and challenge for everyone at the company. The company will work with its seven strategic investors to develop a new model that synergizes the advantages of central and local state-owned enterprises, market-based mechanisms, and coordination with strategic partners. LiuGong will work with its new shareholders to develop more competitive industry partnerships, carry out deep reforms of corporate mechanisms, and inject new vitality into operations to realize its vision.”
With the 13th Five-Year Plan coming to an end, LiuGong is extremely proud of its pandemic prevention efforts in both production and operations. Over the first three quarters of 2020, construction machinery sales increased by 40%; industrial output reached 23.54 billion CNY, representing a year-on-year increase of 39.5%; and operating income reached 19.65 billion CNY, representing a year-on-year increase of 20%.
By entering into these new agreements, LiuGong intends to utilize its new mixed-ownership structure to integrate global resources, improve operation and efficiency, and ensure mutually beneficial cooperation with its partners. The company seeks to fully implement its obligations under the 14th Five-Year Plan, its long-term development goals, and its broader vision for the industry.