PARTNERSHIP IN PROFIT

In September 2015, Ningbo Construction, a Chinese company listed on the Shanghai Stock Exchange, acquired the South African Anglorand Financial Services Group. Anglorand Securities, part of the group, became the first South African securities company to be wholly owned by a foreign investor.

The decision for Ningbo Construction to purchase a South African financial firm was part of a strategic initiative known as the Belt and Road initiative, which Ningo Construction believes has the potential to drive further growth and investment across the continent.

Coupled with deepening Sino-African relations Ningbo and Anglorand is excited about its future plans, and the investor offerings that will be introduced thanks to its innovative partnership.

Chairman of Ningo Construction, Xu Wenwei, and CEO of Anglorand securities, Ji Zhenyong, explains the decision to partner for future growth.

Why was Anglorand purchased by Ningbo Construction?

Xu Wenwei:

Ningbo Construction has grown from a state-owned company estab­lished in 1951, into a large private construction group with a wide range of busi­nesses interests in housing construction, municipal utilities, engineering and building decor. Following its initial public offering and listing in 2011, Ningbo Construction has purchased multiple companies in line with its global strategy and overseas expansion. Purchasing Anglorand is a critical step in Ningbo Construction’s decision to become a global company. As the Belt and Road Initiative unfolds and competition in the domestic construction industry becomes increas­ingly intense, the South African market is Ningbo Construction’s top choice for overseas expansion. Financial cooperation is the engine for compre­hensive Sino-African cooperation, therefore purchasing Anglorand Securities will not only stimulate Ningbo Construction to expand its engineering business overseas, but also enable it to enter the financial services sector.

Why make the purchase now?

At present, the global economy is recovering and stabilizing and Africa especially has strong impetus for growth. However, as the prices of bulk commodi­ties decrease, the United States quits its quantitative easing, foreign capital exits Africa and the income from Africa’s natural resources shrinks, the African economy will face increasingly serious capital short­age in the coming years. Meanwhile, Chinese investment in Africa and Sino-African financial coop­eration has increased, which will not only help African countries to overcome the financial crisis but further strengthen the connection between China and Africa.

Purchasing Anglorand Securities represents the progression of Sino-African financial cooperation. It is the first acquisition of an African securities company by a private Chinese company and as such, Anglorand Securi­ties is the first South African securities company to be owned entirely by foreign capital.

What was the strategy behind the purchase?

South Africa has a compre­hensive legal system and an advanced financial industry with the same standards as Europe and America. It is not only an important springboard for Chi­nese companies in their global expansion strategy, but a bridge for Chinese companies to enter the African market.

Ningbo Construction hopes to deepen Sino-African financial cooperation through Anglorand Securities. Our plan is to operate Chinese financial institutions overseas, expand traditional industries overseas through finan­cial institutions, and help Chinese companies invest and raise funds overseas.

In which African industries and countries does Ningbo Construction plan to invest?

With i) Six of the world’s ten fastest growing economies in the last ten years ii) The highest population growth rate in the world iii) A fast-growing middle-class iv) Numerous recent discoveries of oil, gas and mineral deposits v) 60 percent of the world’s uncultivated arable land vi) Increasing access to technology and communications and vii) A move towards open and democratic governance, Africa’s increasingly important role in the global economy is unprecedented. Africa is envisaged to have 5.8 billion people, accounting for 60% of the global population by 2050. It is in this context, that underdeveloped infrastruc­ture and severe power shortages, present great investment opportunities. We hope to expand our market share in infrastructure construction across Africa by implementing China’s ‘development-oriented’ finance model and the ‘build-operate-transfer’ model that Chinese construction companies are renowned for. In the future, we also hope to participate in other industries such as the financial industry, high-end light industry, medical care, agriculture and tourism through investments and acquisitions.

What is the most important thing for Chinese companies to consider when preparing to expand overseas?

In our experience, the most important thing for Chinese enterprises when expanding globally is to ensure the team consists of skilled professionals – from both China and the local coun­try – and that the most competent local personnel are groomed to global standards.

What kind of company is Anglorand Securities?

Ji Zhenyong:

Anglorand Securities is part of the An­glorand Financial Services Group, which was founded in 1968. The group provides a wide range of products and services including stockbroking, investment banking, institutional derivatives, portfolio manage­ment, asset management and forex and treasury services. It currently has assets under management of over R3 billion ($70 million), and has a physical presence in Johannesburg (head office), Cape Town and Durban. Anglorand is a registered member of Johannesburg Stock Exchange and South African Futures Exchange. It has a full range of licenses from the South African National Credit Regulator and the South African Financial Services Board.

Why did you Ningbo Construction and Anglorand Securities choose each other as suitable partners for this acquisition?

Few financial institutions in South Africa have multiple licenses. Most have already been acquired by the big financial institutions like banks and Independent securities companies with multiple licenses are even fewer. Therefore, Ningbo Construction recognized that purchasing Anglorand Securities was a rare opportunity.

From the perspective of Anglorand Securities, eighty-five percent of Anglorand’s forex business customers are overseas Chinese. Therefore, against the backdrop of deepening Sino-African friendship, we wanted to deepen our connection with Chinese Investors. Further to this, Anglorand employees have shown their support for this acquisition through their continued service with the company.

What can we expect to see from Anglorand Securities in the future?

Anglorand will focus on cross-border mergers and acquisitions consulting and asset management business, as well as private equity funds and family businesses, in order to allocate Chinese capital overseas.

Secondly, we will improve Anglorand Securities’ deal-mak­ing and fund-raising abilities by acquiring a mature team specializing in initial public offerings and asset management in order to equip Chinese enterprises with the ability to invest and raise funds in Africa.

Lastly, we plan to develop Anglorand Securities into a high-end investment bank depending on local teams, connecting Chinese and African markets and special­izing in allocation of assets in the world and cross- border mergers and acquisitions.

What is the biggest opportunity in purchasing and managing a local financial institution in Africa?

The biggest opportunity in managing a local company in Africa doesn’t come from the acquisition itself, but rather from the opportunity to implement national strategies like the Belt and Road Initiative. Due to the China-Africa friend­ship and the economic complementarity of the two countries, as well as the internationalization of the yuan and upgrading of Sino-African financial cooperation, we believe being engaged in South Africa’s advanced financial industry shows our ability to identify these strategic opportunities and leverage them for greatest investor return.

What’s the latest development since Anglorand Securities was acquired?

Several acquisition consulting programs are already under negotiation and our family asset management business has finished its first round of road shows in China announcing the launch of our new programs, and promotion of our forex business among overseas Chinese has begun. As China opens up further and Sino-African friendship deepens, I believe Anglorand Securities and Chinese enterprises in Africa will have a bright future.