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Hon Hai shareholders approve subsidiary's China listing proposal

2018/02/01 16:21:03

Taipei, Feb. 1 (CNA) Shareholders of Taiwan-based manufacturing giant Hon Hai Precision Industry Co. have approved a proposal for the company to list shares of its Internet subsidiary in China.

In a special shareholder meeting held Wednesday, shareholders gave the greenlight to a proposal to allow Foxconn Industrial Internet Co. Ltd. (FII) to launch an initial public offering (IPO) on the Shanghai Stock Exchange.

While there is no immediate timeframe for the IPO, market analysts expect that the listing will take place by the end of this year for Hon Hai -- known as Foxconn in the global market and the world's largest contract electronics maker -- to tap the huge Internet market in China.

In a statement, Hon Hai said that with Internet communications and cloud-based computing business growing rapidly in China, FII's listing is expected to help the company take advantage of this trend.

Hon Hai said the proceeds from the funds raised from FII's IPO are expected to be invested in China to expand its Internet business there.

According to Hon Hai, the future investment in China will focus on a wide range of new technologies, such as cloud-based computing, high performance computing, 5G Internet communications solutions for industry use, data centers and smartphone-related applications.

In addition, the funds will be also used to repay some of FII's loans and boost its liquidity, Hon Hai aid.

Through the presence of FII in China's equity market, the subsidiary is expected to encourage talent in the Chinese market to join and grow with the company, which will boost the company's competitive edge, Hon Hai said.

To diversify its shareholding for the upcoming listing of FII, Hon Hai said the subsidiary is planning to issue new shares, which will account for about a 10 percent stake.

After the IPO, Hon Hai is expected to retain an 85 percent stake in FII, the Taiwanese manufacturing giant said.

It the IPO plan proceeds as planned, it will be the first time Hon Hai has listed a subsidiary in the China market.

In the shareholder meeting, Hon Hai Chairman Terry Gou (郭台銘) said his company is devoted to integrating hardware and software development efforts in a bid to achieve smart production.

Gou said the efforts to develop Internet applications for industrial use are expected to boost production efficiency by 30 percent.

He said Hon Hai is developing artificial intelligence and aims to build about 200,000 robots for production.

Currently, Hon Hai employs about 1 million workers in its production sites in China, including Shenzhen in Guangdong Province and Zhengzhou in Henan Province, rolling out devices for international brands such as Apple, Dell and Hewlett Packard.

After Hon Hai's decision to take FII to the Shanghai Stock Exchange, market analysts said there are concerns that other Taiwanese firms will follow suit, since valuations of stocks listed in the China equity market are generally higher than their counterparts in Taiwan.

On Thursday, shares of Hon Hai gained 1.41 percent to close at NT$93.50 (US$3.21) on the Taiwan Stock Exchange.

(By Chung Jung-feng and Frances Huang)
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