The "A eats Hong Kong" model reappears: ENN Co., Ltd. plans to sprint into the Hong Kong stock market through "privatization + introduction of listing"

### Source: Wall Street CN

Recently, **ENN Energy Holdings Co., Ltd. (600803.SH)**, a leading A-share gas enterprise, has submitted an application to the Hong Kong Stock Exchange (HKEX) for listing.

Unlike many other companies, ENN Energy Holdings’ Hong Kong listing is not for fundraising purposes. Its core objective is to **privatize its subsidiary ENN Energy (2688.HK)**, which is already listed on the HKEX.

In short, ENN Energy Holdings will acquire the shares held by minority shareholders of ENN Energy by means of **"newly issued H-shares plus cash compensation"**, thereby achieving its own listing on the HKEX through this transaction.

Shareholders of ENN Energy will receive two parts of returns: first, a cash payment of **HK$24.50 per share** (funded by ENN Energy Holdings itself rather than raised through an IPO); second, newly issued H-shares of ENN Energy Holdings allocated in proportion to their holdings.

This approach is **rarely seen in the A-share market**.

The last company to adopt a similar path was **Haier Smart Home**, which privatized its H-share subsidiary Haier Electronics in 2020 and successfully completed its introduction listing on the HKEX through this transaction.

Five years later, as the second A-share company attempting this highly challenging capital restructuring model, ENN Energy Holdings is expected to provide valuable reference for other market players planning to take a similar route.

The market is now waiting to see whether ENN Energy Holdings can successfully list on the HKEX.

### The Second Case of "Privatization + Introduction Listing"

The core logic behind ENN Energy Holdings’ listing plan lies in **achieving the parent company’s Hong Kong listing by privatizing its subsidiary**.

Specifically, ENN Energy Holdings will issue H-shares and cash as consideration to privatize its controlled subsidiary ENN Energy, and complete its introduction listing on the HKEX simultaneously.

Under the deal, the consideration for each share of ENN Energy is set at **"HK$24.50 in cash + 2.94 H-shares of ENN Energy Holdings"**.

Upon completion of the transaction, shareholders of ENN Energy will switch to holding H-shares of ENN Energy Holdings. ENN Energy will then be delisted from the HKEX and become a **wholly-owned subsidiary** of ENN Energy Holdings.

"After the completion of the privatization proposal, plan shareholders will not only continue to invest in ENN Energy—which boasts a range of competitive advantages and fully benefits from the global energy transition—as part of the expanded ENN Energy Holdings Group, but also share the potential synergies and business growth opportunities that may be realized through the further integration of the Company and ENN Energy," ENN Energy Holdings noted.

This marks the second case in the A-share market following Haier Smart Home of **"an A-share parent company issuing H-shares to privatize its Hong Kong-listed subsidiary and achieve dual-listing status"**.

In 2020, Haier Smart Home was successfully listed on the HKEX, marking the implementation of the first unprecedented A-share project to achieve "A+H dual listing" by privatizing an H-share subsidiary.

In terms of the specific operational path, Haier Smart Home completed the privatization of Haier Electronics by issuing H-shares to Haier Electronics’ shareholders through an introduction listing on the HKEX, using the newly issued shares as consideration.

After the transaction, Haier Electronics was privatized and delisted, becoming a wholly-owned subsidiary of Haier Smart Home. For Haier Smart Home, this move not only realized the overall listing of its home appliance business segment, but also effectively resolved the long-standing issues of **horizontal competition and corporate governance structure** that had plagued the company.

ENN Energy Holdings is now "following Haier’s footsteps" by adopting an extremely similar capital operation path.

The core advantage of the "privatization + introduction listing" scheme for dual listing is that **the cash cost of privatization is controllable**.

Based on the closing price on the trading day before the transaction announcement (March 25, 2025), ENN Energy had a total market capitalization of RMB 62.1 billion. It would have been impractical for ENN Energy Holdings to privatize the subsidiary using cash alone.

However, under the current proposal, the cost accounted for by equity payment is close to **70%**, which significantly reduces the cash pressure on ENN Energy Holdings for the privatization of ENN Energy.

The key to gaining the support of minority shareholders of ENN Energy for this transaction lies in the **premium offered in the consideration**.

Based on the closing price of ENN Energy Holdings of RMB 19.65 per share on March 25, 2025 (the trading day before the transaction announcement), the total consideration per share of ENN Energy amounts to RMB 79.93, representing a premium of **as much as 34%** compared to ENN Energy’s closing price on the same day.

Nevertheless, **challenges remain**.

The Hong Kong stock market is currently facing liquidity challenges, and it has become common for new shares to break below their IPO price. There is still uncertainty as to whether investors can profit from this privatization plan.

Taking the four new stocks listed on December 22 as examples, Huayi Biotech, BenQ Hospital, Nanhua Futures Co., Ltd., and Impression Da Hong Pao saw their share prices drop by **29%, 49%, 24%, and 35%** respectively on their first trading day.

This means that if ENN Energy Holdings’ H-shares perform poorly after listing, investors’ arbitrage space may be under pressure.

### Enhancing Integration Capabilities

This transaction is expected to further enhance the **business synergy** of ENN Energy Holdings.

ENN Energy Holdings’ natural gas business covers three major links: **upstream gas supply, midstream infrastructure, and downstream distribution**.

- **Upstream**: ENN Energy Holdings has signed long-term supply contracts for over 10 million tons of natural gas per year, making it the private enterprise in China with the largest volume of overseas LNG long-term contracts.

- **Midstream**: The Zhoushan LNG receiving terminal operated by ENN Energy Holdings achieved an actual handling capacity of 7.5 million tons in 2024, which is expected to exceed 10 million tons per year with the advancement of its Phase III project.

- **Downstream**: Natural gas sales and other businesses, primarily undertaken by ENN Energy, are an important source of revenue for ENN Energy Holdings.

In 2023 and 2024, the natural gas retail business contributed RMB 69.453 billion and RMB 67.241 billion to ENN Energy Holdings’ revenue respectively, accounting for **over 50%** of the total revenue in both years.

Among this, part of the natural gas sold by ENN Energy was purchased from ENN Energy Holdings, with the purchase amount reaching RMB 1.675 billion in 2024.

Following the privatization of ENN Energy by ENN Energy Holdings, the procurement of natural gas and other products by ENN Energy from ENN Energy Holdings will shift from **market-oriented related-party transactions to internal resource allocation**. This will break the previous synergy barriers between the two listed companies, free from the pricing constraints and approval processes of cross-listed related-party transactions. It is expected to further reduce the procurement costs of the downstream business and fully unleash the closed-loop advantages of ENN Energy Holdings’ **"upstream resources + midstream infrastructure + downstream terminals"** business model.

Affected by factors such as fluctuations in natural gas prices and periodic adjustments in downstream demand this year, ENN Energy Holdings’ revenue has experienced a slight decline. In the first three quarters of 2025, its revenue reached RMB 95.893 billion, a year-on-year decrease of **2.92%**.

Now, ENN Energy Holdings is seeking **diversification of its business structure**.

Beyond natural gas, ENN Energy Holdings is accelerating the deployment of **integrated energy businesses** such as photovoltaic power generation and energy storage, as well as smart home businesses.

In the first half of 2025, ENN Energy Holdings added **324.46 MW of photovoltaic capacity** and **45.75 MWh of energy storage capacity** connected to the grid.

Today, the integrated energy business has grown into the **second-largest business segment** of ENN Energy Holdings, accounting for 10.8% of the total revenue in the first half of 2025.

The smart home business relies on the over 32 million users covered by ENN Energy Holdings, mainly providing various products such as smart IoT solutions. However, its revenue share remains relatively limited, accounting for only **3.2%** in the first half of 2025.

With its listing on the HKEX, ENN Energy Holdings is expected to further open up the business closed loop of **"natural gas core business + integrated energy + smart home"**, transforming itself from a natural gas operator into a **global integrated energy and smart living service provider**.

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