China Southern Airlines (CZ, Guangzhou) is set to dispose of a 45% stake in its wholly-owned CSA Logistics subsidiary as the majority-state-owned carrier progresses with its mixed-ownership reforms.

According to the investment agreement, CSA Logistics' registered capital will grow from CNY1 billion (USD152.7 million) to CNY1.82 billion (USD277.6 million). After completing the capital contribution, set for December 31, 2023, the funds will be used by CSA Logistics for general working capital.

A stock market filing said China Southern had seen strong demand for the 45% tranche of CSA Logistics shares it had tendered for earlier in the year. As such, new shareholders include:

  • Shanghai Yinnan Enterprise Management Partnership - a private equity firm whose ultimate beneficial owner is shareholder Higashi Michihiro - 10.0%;
  • Taicang Zhongding Yuanxiang Equity Investment Partnership - a private equity firm owned by Yan Li - 10.0%;
  • Guoxin Shuangbai No. 1 (Hangzhou) Equity Investment Partnership (LP) - investment vehicle wholly-controlled by state-owned China Reform Holdings Corporation - 10.0%;
  • Zhuhai Junlian Yige Equity Investment Enterprise (LP) - a private equity firm owned by local tycoons Zhu Linan, Chen Hao, and Wang Nengguang - 5.0%;
  • Zhongjin Qichen (Suzhou) Emerging Industry Equity Investment Fund Partnership (LP) - an investment firm ultimately owned by China International Capital Corp. - 1.9%;
  • Zhongjin Pucheng Investment Co., Ltd - a wholly-owned subsidiary of China International Capital Corp. involved in export/import and cargo transport - 0.6%;
  • Sinotrans - a state-owned integrated logistics service provider - 3.0%;
  • Zhuhai Yuanqi Enterprise Management Partnership (LP) - a platform through which CSA Logistics’ employees hold equity interests in the company - 4.5%.

China Southern will retain a controlling 55% stake in the company.

Established in June 2018, CSA Logistics's principal business focusses on cargo shipments using aerial and overland means, forwarding, customs clearance, and general cargo handling activities. As of October 31, 2020, it registered a net profit after tax of CNY3.26 billion yuan (USD498 million) on revenue of CNY12.285 billion (USD1.875 billion).

China Eastern Airlines (MU, Shanghai Hongqiao) and Air China (CA, Beijing Capital) have initiated similar ownership reforms of their respective cargo and logistics subsidiaries.