Analysts: Sany to lose 30% of staff and is under pressure ahead of IPO
Sany is returning to investors on the Hong Kong stock exchange as it looks to raise $2 billion in an IPO. The company is also rumoured to be prepared to shed 30% of its staff. The Chinese manufacturer scrapped plans for a much larger cash injection of $3.3 billion in September last year following the loss of confidence in […]
Sany is believed to be under considerable financial strain
Sany is returning to investors on the Hong Kong stock exchange as it looks to raise $2 billion in an IPO. The company is also rumoured to be prepared to shed 30% of its staff.
The Chinese manufacturer scrapped plans for a much larger cash injection of $3.3 billion in September last year following the loss of confidence in global markets sparked by the European sovereign debt crisis.
According to local media, Putzmeister’s new owners will begin sending out its new share prospectus to investors on 16 July. The value of the share issue is expected to be 10% of the value of the company’s new capital.
Sany had previously stated that it was pursuing the IPO to raise cash for investment, but the news of the re-adjusted offering has been seen as sign that it is struggling with weaker demand for equipment. The company is also rumoured to be preparing a re-structuring programme that will see it cut staff by as much as 30%.
Efforts to control inflation and local government spending since the beginning of 2011 has destabilised demand for equipment in China, increasing pressure on Chinese and global manufacturers geared for boom-time conditions. According to the Chinese Construction Machinery Association, its latest survey of companies suggests that sales revenue fell by 20% in the first five months of 2012.
Chinese English language newspaper Global Times interviewed several analysts with most agreeing that Sany needs to overhaul its operation to remain competitive in a crowded market.
In an interview with the newspaper, Liu Shengjun, deputy director of the CEIBS Lujiazui International Finance Research Center, said that weak demand is placing a financial strain on the company.
“Sany’s acquisition of German concrete pump maker Putzmeister also added to its capital pressure,” Shengjun added.
