Research On The Equity Carve-out Of A+H Central Enterprises From The Perspective Of Mixed Ownership Reform ——Take China Railway Construction As An Example

With the rapid development of China’s socialist market economy and increasingly fierce market competition,many companies have diversified their operations to diversify their risks in order to improve their competitiveness and capture more market share.Listed companies accelerate the pace of development and constantly incubate new businesses and expand into new areas,which require long-term sustainable and substantial financial support from group companies or parent companies.Therefore,in order to maximize the value of parent and subsidiary companies and promote long-term development,some new business areas and subsidiaries that are not closely related to the main business of the parent company are carved out and listed separately to better achieve "secondary financing and value-added".Before the introduction of the domestic carve-out policy,companies with the demand for carve-out listing basically chose overseas or H-share listing,but since December 2019,when the Pilot Regulations on Domestic Listing of Subsidiaries of Listed Companies（hereinafter referred to as "Pilot Regulations"）came into effect,the channel for domestic carve-out listing has been opened,and as of October 13,2020,the number of A-share listed companies releasing preproposals for carve-out of subsidiaries As of October 13,2020,a total of 45 A-share listed companies have issued pre-proposed carve-out of their subsidiaries,and domestic carve-out have quickly become a hot topic.In recent years,mixed reform has become an important breakthrough point in the reform of China’s state-owned enterprise system,in which a part of large stateowned enterprises with diversified operations have adopted or intend to use the carve-out subsidiary listing and other means to achieve the purpose of mixed reform,mixed reform has become an important breakthrough point in the reform of stateowned enterprises.2020 June 30,the "Three-Year Action Plan for the Reform of State-owned Enterprises（2020-2022）"（hereinafter referred to as the "Three-Year Plan"）was formally adopted,and the current round of SOE reform,with hybridization as the main breakthrough point,will enter the fast track.However,whether the SOEs’ choice of carve-out will bring positive impact to the parent and child enterprises,whether they can directly achieve the expected financial benefits,and whether they can maintain good performance in China’s capital market and create value for their shareholders and public shareholders are considered important issues based on the urgent need for in-depth study of the new capital contractionstyle strategy of SOEs’ choice of carve-out.China Railway Construction Corporation Limited（CRCC）was the first listed company to disclose its "A to A" proposal six days after the enactment of the Pilot Regulations.Prior to this carve-out,CRCC had already successfully conducted a carve-out ——Iron Construction Equipment（ICE）was carved out and listed on the Hong Kong Stock Exchange in 2015.As the first domestic central enterprise to be listed on the A+H stock split,the author believes that it has important research significance as it is the first one to make the "A to A" proposal.This paper mainly adopts an inductive method,institutional change analysis method and case study method to analyze the actual situation of CRCC’s divestment in the context of mixed ownership reform based on the relevant theories,and selects a typical case of CRCC’s divestment of its ICE to be listed on the Stock Exchange as the research object.The case was analyzed from various perspectives,including the motivation,difficulties and solutions of the carve-out,and the short-term performance of the carve-out,in order to summarize the impact of the carve-out on the parent and child companies.It is found that the listing of ICE has enabled the parent company,China Railway Construction,to gain excess return in the short term;in the long term,the financial performance is poor due to the cyclical fluctuations of the industry and national policies,but it has achieved good performance in learning and growth,internal process management and customer level.After a comprehensive analysis,this paper summarizes the findings of the case study,including the advantages of the spin-off over other hybrid reform methods,why China Railway Construction underwent a carve-out to achieve the hybrid reform,and what kind of hybrid reform effect the carve-out achieved.Finally,some suggestions of the author on the carveout are presented from three levels: government guidance,market regulation and corporate governance.