Through the launch of these D-shares at the infant Frankfurt-based China Europe International Exchange (CEINEX), Chinese companies are expanding their foothold in Europe and flanking the U.S., where the Trump Administration, increasingly aware of China’s designs, is taking steps to block their entry into the U.S. homeland.
Four sources with direct knowledge of the process have disclosed, Chinese white goods maker Qingdao Haier Co Ltd plans to be among the first Chinese companies to sell D-shares in Frankfurt.
The listing of Haier’s shares on the infant Frankfurt-based China Europe International Exchange would kick off the D-share project. Incidentally, D stands for Deutschland.
The infant CEINEX was setup in 2015 by Berlin and China and is owned by Deutsche Boerse and the Shanghai Stock Exchange (SSE).
CEINEX has been working to enlist prominent Chinese companies for a splashy debut in the new market.
On Friday, a statement by Haier stated that although it has not made any decision on the project and hired advisers for it, it was studying the issue.
For China, the establishment of D-Shares is of strategic nature since it aims to gradually increase exposure of its prominent companies to foreign markets.
D-shares would join a long list of offshore Chinese forms of equity including H-shares and red-chips in Hong Kong, S-chips in Singapore and N-shares in New York.
Significantly, this space makes up more than a quarter of the global emerging markets equities index produced by MSCI, which in 2017 decided to include domestically-listed Chinese shares – known as A-shares – for the first time.
A circular for potential investors and issuers of D-shares portray the CEINEX’s goal as a means to attract “Chinese national champions” and the “best of the best.”
The project has high level backing: German Chancellor Angela Merkel along with Chinese Premier Li Keqiang were present at the time of the signing of the agreement between Deutsche Boerse and Shanghai Stock Exchange.
With a 10.3% global market share in refrigerators segment in 2016, Haier plans on further expanding its footprint in Europe.
In 2016, Qingdao Haier acquired General Electric Co’s appliance business for $5.4 billion.
As per two sources with knowledge of the process, the initial wave of three listings of D-shares on CEINEX is expected to raise funds ranging from 500 million and 1 billion euros for each of the companies that lists, for a total of up to 3 billion euros.
As per two sources, although Haier’s D-share offering has not yet been finalized, it is likely to touch 1 billion euros, since both, Deutsche Boerse and SSE are keen to land a “landmark” transaction.