Mainboard-listed Sapphire to acquire China railway infrastructure business in turnaround move

Sapphire Corporation announced on Nov 25 that it plans to acquire a China-based engineering, procurement and construction business for 360 million yuan (S$75.9 million) as part of a new corporate and turnaround strategy to propel growth via railway infrastructure and engineering projects after disposing its loss-making steel business.

Under the proposed transaction structured by Sapphire chief executive officer Teh Wing Kwan, the company has entered into a conditional subscription and sale and purchase agreement to acquire the entire share capital of the Hong Kong incorporated Ranken Infrastructure Limited via issue of new Sapphire shares worth $16.5 million at 10 cents each to all 34 beneficial owners of Ranken and a subsequent capital injection of 282 million yuan.

Founded in 1998, based in Beijing and Chengdu, Ranken is now China's second-largest, privately-owned integrated rail transport infrastructure construction group and the only privately-owned operator in China which has obtained the prestigious full AAA-certification for design, construction and project consultation in the rail sector, Sapphire said in a statement.

Ranken's clients are mostly state-owned enterprises and Fortune 500 companies in China. It has also successfully executed the second-largest railway infrastructure project in Bangladesh and other major projects in India.

While Ranken to date has undertaken and managed major infrastructure projects mostly on a build-transfer basis, Sapphire intends to leverage on Ranken's capabilities and track record, to pursue accelerated growth via two strategies.

The first is to increase its order book of urban rail transit, high-speed rail and other major land transport infrastructure projects in China and overseas, particularly South-east Asia and India.

The second is to enter into strategic partnerships or joint-ventures with SOEs or provincial governments for large-scale township planning and urban development projects under which Ranken can participate in long-term infrastructure projects on Build-Operate-Transfer and, possibly, Build-Lease-Transfer basis.

The acquisition is subject to approval by Sapphire shareholders at an extraordinary general meeting to be convened.