China Molybdenum Co. (3993), the second-biggest producer of the steelmaking material in China, said a closely held Chinese investment company had displaced a government-backed company as its largest shareholder.
Cathay Fortune Corp. holds 1.8 billion shares, or 36 percent, of the company, overtaking the 35 percent stake held by Luoyang Mining Group Co., China Molybdenum said in a statement yesterday. Luoyang Mining, owned by Luoyang city government, doesn’t plan to increase its holding to regain control, according to the statement. Shanghai-based Cathay Fortune wasn’t immediately able to comment.
The change in control exemplifies how China is seeking to diversify ownership of state-owned companies. Pension funds, insurance funds and private equity funds are encouraged to invest in state entities, according to a government statement last month. Yu Yong, who controls Cathay Fortune and is on Forbes’s list of China’s 400 richest people, first invested in China Molybdenum in 2004, according to Cathay Fortune’s website.
The increased holding “was a strategic investment made on basis of its business operation model and investment philosophy,” China Molybdenum said yesterday. The group won’t make any substantial changes to existing operations and development plans in the next 12 months, it said.
Yu made a bid in 2012 for Discovery Metals Ltd., an Australian copper producer, for A$830 million ($750 million) jointly with China-Africa Development Fund. The takeover was later abandoned.
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