Ouyeel Industrial Products, a Chinese online platform that offers supply-chain industrial products, has bagged a strategic investment of 1 billion yuan ($138.3 million).
Shanghai-headquartered Ouyeel Industrial Products, a subsidiary of state-owned iron and steel giant China Baowu Steel Group, roped in strategic investors including Hidden Hill Capital, a private equity (PE) firm backed by GLP Capital Partners (GCP), according to an official statement.
Its parent group’s Baowu Green Carbon Fund, a 10-billion-yuan ($1.4 billion) fund that invests in clean energy and green tech, also participated in the deal.
A range of Chinese domestic companies joined the investment, including conglomerate Hebei Logistics Industry Group, steel manufacturer Xinyu Iron & Steel Group, power transformer producer TBEA, state-owned Ansteel’s investment arm Ansteel Group Capital, and an affiliate of Shanghai Baoshan State Owned Capital Investment Management Group.
China International Capital Corporation Limited (CICC), a partially state-owned financial services firm, served as the exclusive financial adviser to the deal.
Ouyeel Industrial Products was founded in September 2020 with 4 billion yuan ($552 million) in registered capital to leverage Baowu’s resources and expertise in the procurement, engineering design and equipment manufacturing, warehousing, intelligent operations and maintenance, and logistics of industrial products.
With a gross revenue of almost 37.9 billion yuan ($5.2 billion) in 2022, the subsidiary has accumulated 270,000 registered users on its platform with its total gross merchandise value (GMV) hitting 350 billion yuan ($48.3 million) by the end of 2022, according to company data.
The strategic investment in Ouyeel Industrial Products marks the latest example of the state-owned parent’s efforts to introduce external shareholders to its dozens of “first-tier” subsidiaries for the so-called “mixed-ownership reform,” as some of the subsidiaries prepare for a public listing.
A mixed-ownership reform, in which one or more private-sector investors buy shares in a state-owned enterprise (SOE), can lead to checks and balances between shareholders of different natures. It is a shareholding structural reform that many state-owned companies in China use to help enhance corporate governance, company operations, and regulatory capacity.
Baowu, which owns 34 first-tier subsidiaries, has by far completed the mixed-ownership reforms of 12 of them, including Baowu Carbon Technology and Sinosteel Luonai Materials Technology.
The parent group has a target to list the shares of 20 subsidiaries by the end of 2025, China’s state-owned newspaper The Securities Times reported in May, citing Baowu’s chairman Chen Derong.
Sinosteel Luonai, which manufactures refractory materials, went public on Shanghai’s tech-focused STAR Market in June 2022, raising 1.14 billion yuan ($157.3 million) in its initial public offering (IPO).