VALIN Built the First Steel Industry Fund in CHINA

By Valin New from Changsha: in the reorganization of the entire steel industry, companies with strong capital background have the higher possibility of success to stay in the game and get stronger by merging with others. Yesterday, Valin Iron & Steel Group, the biggest steel enterprise in our province, together with China Huarong Asset Management Company, founded the first investment fund of steel industry in China, with an initial input of 1 billion yuan. Helped by this fund, Valin Group will have the capability to conduct M & A in a larger scope, so as to expand its capital at lower cost. Vice Secretary of Hunan Provincial Communist Party Committee & Governor, Mr. Zhou Qiang, attended the agreement signing ceremony yesterday.
According to the cooperation agreement between Valin Group and China Huarong Asset Management Co., the two companies will start full cooperation in the field of system change of state owned companies, industrial conformity and upgrading, enterprise M & A, asset disposal, investment banking business, etc. The two companies declared to build the industry investment fund, with an initial input of 1 billion yuan and an expected input of 5 to 10 billion yuan in the future. This fund will be used to conduct investment and merger in the steel industry.
Mr. Li Xiaowei, Board Chairman of Valin Group, said that generally this year s investment of Valin Group will be 2 billion yuan larger than last year, making the total amount of investment to 10 billion yuan. And in the future reorganization of steel industry, Valin will go on the way of expanding by M & A at low cost. The establishment of the first investment fund of steel industry of China plays an important role for Valin s future expending at low cost said Li Xiaowei.
In the future, Valin Group and Huarong Asset will take the first place to set up a Steel Industry Asset Management Company, with the initial capital input of 1 billion yuan and expected input of 5 to 10 billion yuan. China Huarong Asset Management Company already has 12 billion yuan of steel stocks in hand. And this fact will provide a new platform for the future strategic cooperation between the two companies. And it is also the business goal for them. As a financial organization Huarong Asset has obtained rich experiences in business practice. Cooperation in financial renting, investment banking, asset securitization, etc. between the two companies could also be expected.
As a matter of fact, before signing the strategic cooperation agreement yesterday, Valin and Huarong have already established certain connection: in 1999, Huarong became the second largest shareholder of Valing Hengyang Steel.
M & A has long been highlighted in Valin Steel. Before this project with Huarong Asset, Valin cooperated with Mittal in 2005, which is the largest steel company in the world, to introduced 6 technologies and products with high added value and technical content. In April this year, Valin purchased 17.34% of the equity of FMG, the 3rd largest company of iron ore industry in Australia, with 6.2 billion yuan RMB. After this deal, Valin became the second largest shareholder of FMG.