Huafa may issue $10 billion in supply-chain securities

The Shanghai Stock Exchange says it has no objection to Huafa Group issuing 10 billion yuan ($1.5 billion) in supply-chain asset-backed securities in concert with the Outline Development Plan for the Greater Bay Area.

Approved earlier this month was Huafa's Huajin-Linklogis-Huafa Greater Bay Area Supply Chain 1-30 Asset Support Special Plan. Huafa Group, headquartered in Wanzai of Xiangzhou District, is the core debtor. Huajin Securities, a Hong Kong subsidiary of Huafa, is lead underwriter. Linklogis is a supply-chain financing service in the Qianhai Free Trade Zone of Shenzhen.

The 10 billion yuan in securities will be issued in up to 30 installments. Relying on Huafa's qualification and credit, upstream suppliers may realize financing in the capital market using the accounts receivable balance of Huafa subsidiaries.

The Outline Development Plan was released by the Central Committee of the Communist Party of China and the State Council in February. They pledge full support to Greater Bay Area cities in using their respective advantages to develop a characterized financial services industry.

The issuance of the asset-backed security not only answers the national call, but can also be referenced by other core enterprises and their upstream and downstream companies in financing innovation.

Huafa's Hengqin Financial Industry Service Base [Photo courtesy Zhuhai Daily]

Established in 1980, Huafa Group is a comprehensive state-owned enterprise engaged in urban operations, real estate, finance, industrial investment, commerce trade, and modern services. Over the past three decades, it has expanded its business from Zhuhai to more than 60 domestic cities as well as to San Francisco and Tel Aviv.

The group has been listed among the Top 500 Chinese Enterprises from 2016 to 2019. Total assets exceeded 280 billion yuan ($41.5 billion) in 2018, while operating revenue was 54.4 billion yuan ($8 billion), and contract sales reached 89.9 billion yuan ($13.3 billion).