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China Billionaire Backing Nicaragua Canal to List Company

Beijing Xinwei Telecom Technology Co., controlled by the Chinese billionaire who has proposed building a $40 billion canal through Nicaragua, is planning a reverse takeover to obtain a listing in Shanghai.

Beijing Zhongchuang Telecom Test Co. (600485), listed in Shanghai, said yesterday it will buy a 96.5 percent stake in Beijing Xinwei. It will then conduct a private placement of shares that will make Beijing Xinwei Chairman Wang Jing its largest shareholder, according a statement to Shanghai’s stock exchange.

The transaction would create the first publicly traded company among Wang’s assets that span agriculture, investment and media. In June, Nicaragua granted Wang’s Hong Kong-based HKND Group a 50-year concession for rights to build an inter-oceanic canal that the Central American country estimated will cost $40 billion, or more than four times its 2011 gross domestic product.

Beijing Zhongchuang surged by the 10 percent daily limit in Shanghai, the biggest one-day gain in four months, after the stock resumed trading following a one-week suspension. China’s benchmark Shanghai Composite Index (SHCOMP) was little changed at the mid-day trading break.

The proposed transaction requires approval by the China Securities Regulatory Commission and shareholders of Beijing Zhongchuang, according to yesterday’s statement. Wang owns 36.97 percent of Beijing Xinwei’s shares, it said.

Beijing Xinwei, founded in 1995, makes wireless phone gear. Wang said the company’s goal is to become one of the world’s top three telecommunications companies in five to 10 years, according to the company’s website. Xinwei signed a contract last year worth as much as $300 million to set up a phone network in Nicaragua.

The company’s 2012 net income fell to 490.6 million yuan ($80.2 million) from 565.9 million yuan a year earlier, according to Beijing Zhongchuang’s statement. Profit for the first half of 2013 was 1.68 billion yuan, it said, without giving a comparative figure.

To contact Bloomberg News staff for this story: Penny Peng in Beijing at ppeng18@bloomberg.net

To contact the editor responsible for this story: John Liu at jliu42@bloomberg.net

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