February 8, 2018 / 11:35 AM / in 6 months

Exclusive: Haier to headline launch of Chinese D-shares in Germany - sources

FRANKFURT/HONG KONG (Reuters) - White goods maker Qingdao Haier Co Ltd is planning to be among the first Chinese companies to sell so-called D-shares in Frankfurt, four people with direct knowledge of the process told Reuters.

A Haier refrigerator is seen on sale at an appliance store in Westminster, Colorado January 15, 2016. REUTERS/Rick Wilking/Files

The Haier listing would kick off the D-share project - D is for Deutschland - on the infant China Europe International Exchange based in Frankfurt.

CEINEX was set up with the blessing of Beijing and Berlin in 2015 and is mostly owned by Shanghai Stock Exchange (SSE) and Deutsche Boerse. [reut.rs/2E7Yzs5]

CEINEX has been working to enlist prominent Chinese companies for a splashy debut for the new market.

A circular for potential investors and issuers of D-shares, seen by Reuters, described the CEINEX’s goal as to attract “Chinese national champions” and the “best of the best.”

CEINEX and Haier declined to comment. All the people declined to be named as the information was not public.

The establishment of D-Shares would mark the latest in a series of gradual moves by China to increase foreign engagement with its companies, albeit often at a distance. 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.

This universe already makes up more than a quarter of the global emerging markets equities index produced by MSCI, which last year decided to include domestically-listed Chinese shares - known as A-shares - for the first time.

The German project has high-level backing: China's Premier Li Keqiang and German Chancellor Angela Merkel were present in 2015 at the signing of the agreement between Deutsche Boerse and Shanghai Stock Exchange that formed CEINEX. [reut.rs/2EaH1f8]

Haier, with 10.3 percent of the global market for white goods such as refrigerators in 2016, according to consultancy firm Euromonitor, has a large footprint in Europe and plans to expand in the region.

Qingdao Haier, its main Shanghai-listed unit, is China’s top household appliances maker and in 2016 acquired General Electric Co’s appliance business for $5.4 billion.

An initial wave of three D-share listings on CEINEX is expected to raise between 500 million and 1 billion euros for each of the companies that lists, for a total of up to 3 billion euros, according to two people with knowledge of the process.

While the size of Haier’s share offering has not been finalised, it would likely reach about 1 billion euros, as both SSE and Deutsche Boerse are keen to land a “landmark” transaction, according to two of the people.

CEINEX said in marketing materials that it is carefully vetting potential D-share issuers and has created a short-list of 10 A-share listed blue-chips following meetings with 80 such companies.

“This time, the Chinese national champions come to Europe,” the marketing materials said. “Different from Chinese red-chips that listed on Frankfurt Stock Exchange in the last 10 years.”

Reporting by Tom Sims in FRANKFURT, Julie Zhu and Fiona Lau in HONG KONG; Editing by Jennifer Hughes in Hong Kong and Jane Merriman in London

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