Chinese motorcycle and automobile manufacturer Lifan Technology announced at the Shanghai Stock Exchange on Monday night that it plans to set up a joint venture with Geely Auto Group in the Liangjiang New Area in Chongqing. The registered capital of the new company is 600 million yuan ($94.24 million), of which Lifan Technology contributes 300 million yuan in monetary funds, with a shareholding ratio of 50%, while Geely Auto Group accounts for the rest.
According to the investment cooperation agreement to be signed by both parties, Geely Auto Group will fully support the management and operation of the target company’s carmaking business, and will work with Lifan Technology to promote the transformation of its automobile business.
Lifan Technology is mainly engaged in the R&D, production and sales (including export) of passenger cars, motorcycles and engines.
In 2020, Lifan Technology was reorganized. On November 6, 2020, the reorganization manager of Lifan Technology signed an investment agreement with Chongqing Liangjiang Equity Investment Fund Management, Hangzhou Maijie Investment and Geely Technology Group.
They clarified the restructuring investors, and determined that Hangzhou Maijie Investment and Chongqing Liangjiang Equity Investment Fund Management jointly initiated the establishment of Manjianghong Equity Investment Fund.
Due to the implementation of the reorganization plan, the ownership structure of Lifan Technology has undergone major changes.
Among them, Manjianghong Equity Investment Fund Enterprise holds about 1.35 billion shares, and its shareholding ratio has increased from 0 to 29.99%, becoming a new controlling shareholder. The executive partner Chongqing Manjianghong Equity Investment Fund Enterprise became the new actual controller.
Li Shufu, Founder and Chairman of Geely, holds 900 million shares through Chongqing Jianghehui Enterprise Management, which is wholly-owned by Hangzhou Maijie Investment, accounting for 20%, making Li the second largest shareholder.
Lifan Holdings, the former controlling shareholder of Lifan Technology, still holds about 619 million shares, but its proportion has decreased from 47.08% to 13.66%, thus becoming the third largest shareholder.
According to the agreement, Geely Auto Group will help Lifan Technology improve management and industrial upgrading, relying on its systematic advantages and professional capabilities in the whole process of car building. The two companies will also integrate R&D, supply chains and sales channels to achieve win-win development.
In addition, both parties will coordinate travel companies and battery swapping service companies. The target company will continue to invest in R&D and upgrade its vehicle models to meet market demand.