Nanjing Iron and Steel Company

Nanjing Iron and Steel Company, commonly abbreviated as NISCO and also known in Chinese market usage as Nangang, is a publicly traded steel producer based in Nanjing, Jiangsu Province, China. Its activities center on the smelting and processing of ferrous metals and the manufacture and sale of steel materials. The company is the listed operating entity associated with the broader Nanjing Iron and Steel complex, whose industrial origins reach back to the establishment of a steel plant in Nanjing in 1958. The present listed company was created in 1999 when Nanjing Iron and Steel Group separated part of the plant’s production and assembly operations into a new corporate entity. NISCO subsequently listed on the Shanghai Stock Exchange in 2000. Although the group initially retained a large majority holding, the ownership and control structure changed several times as interests were transferred into intermediate holding companies and joint ventures. This restructuring connected the listed company with both the state-owned Nanjing Iron and Steel Group and Fosun-related private-sector shareholders. A major phase of corporate expansion occurred in 2010, when NISCO acquired assets from its direct parent, Nanjing Nangang Iron and Steel United. The acquired businesses had previously been organized in Nanjing Nangang Industrial Development Co., Ltd. The transaction was completed through an all-share arrangement with a stated nominal value of approximately CN¥9.1 billion, increasing the parent’s shareholding in the listed company to 83.78% at that point. The transaction brought additional steel-manufacturing assets and related operations into the listed entity, but also reflected the related-party relationships that existed within the Nanjing Iron and Steel corporate structure. NISCO’s business is primarily industrial rather than consumer-facing. Its product portfolio includes steel plate, sections and other steel materials used in construction, machinery, energy, transportation, shipbuilding and other heavy-industry applications. The company also participates in upstream and trading activities connected with iron ore and other raw materials. It has maintained business relationships with international and Hong Kong-listed trading companies, including arrangements related to iron-ore trading. The company has used capital-market transactions to address ownership, investment and balance-sheet requirements. Around 2016, it entered into an agreement with banks and other parties involving a debt-to-equity swap connected with its subsidiary Nanjing Nangang Industrial Development. The capital increase was completed in 2017, when the listed company also carried out a private placement that issued approximately CN¥1.788 billion of new shares. These actions formed part of a broader effort to adjust the capital structure of the steel business. NISCO was included in the small-cap SSE 380 Index from December 2015 through December 2017. World Steel Association data reported that the company ranked 45th globally by crude-steel production in 2015, with output of approximately 8.590 million metric tons. Its scale, listed status and relationship with Nanjing Iron and Steel Group make it an important regional steel producer, although it is not primarily marketed as an internationally famous consumer brand. The company’s current identity remains tied to steel manufacturing, industrial supply and the wider Nangang group structure.

Nanjing’s modern steelmaking history began in 1958, when a steel plant was established in the city. The industrial operation later became part of the Nanjing Iron and Steel Group, a state-owned steel enterprise associated with the development of heavy industry in Jiangsu Province. The group’s production facilities and related businesses eventually formed the industrial base from which the listed Nanjing Iron and Steel Company was created. In 1999, Nanjing Iron and Steel Group spun off part of the plant’s production and assembly operations and incorporated Nanjing Iron and Steel Company. The new entity became a listed company on the Shanghai Stock Exchange in 2000. At the time of the listing, the parent group retained approximately 70.95% of the shares. Subsequent disposals and reorganizations changed the control structure, moving ownership from the original direct group holding into joint ventures and other legal entities connected with Nanjing Iron and Steel Group. In 2003, a joint venture known as Nanjing Iron and Steel United was created between Nanjing Iron and Steel Group and a consortium of private-sector companies associated with Fosun. The group contributed its interest in the listed steel company to the venture. The initial ownership arrangement gave Nanjing Iron and Steel Group 40% of the joint venture, Fosun High Technology and related entities 50%, and Guangxin Technology 10%. Fosun-related interests later became associated with Fosun International, a Hong Kong-listed conglomerate. A further holding-company reorganization took place in 2009, when Nanjing Nangang Iron and Steel United was incorporated as an intermediate parent. Nanjing Iron and Steel United became its wholly owned subsidiary. At that time, the holding structure controlled approximately 62.69% of NISCO, while Baosteel Group was reported as a smaller shareholder with approximately 2.42%. The reorganization placed the listed company within a more complex corporate group spanning the Nanjing state-owned steel interests and Fosun’s private-sector investment network. In 2010, NISCO acquired businesses and assets from its direct parent, Nangang United. The assets were organized in Nanjing Nangang Industrial Development Co., Ltd. and were treated as related-party assets because of their links to the parent. NISCO paid through an all-share transaction with a stated nominal value of CN¥9.1 billion. Following the transaction, Nangang United’s ownership of the listed company rose to 83.78%. The deal expanded the listed entity’s asset base and transferred additional steel-related operations into it. NISCO also developed relationships in the international raw-material supply chain. It had a long-running business partnership with Hong Kong-listed Prosperity International concerning iron-ore trading. In 2011, NISCO acquired a 10% interest in All Wealthy Capital from Prosperity International chairman Wong Ben Koon for US$50 million. When the intended initial public offering of All Wealthy Capital did not proceed, the shares were sold back to Wong for the original amount plus interest. From December 2014, Prosperity International was treated as a related party of NISCO after Nanjing Iron and Steel Group acquired more than 10% of Prosperity International. Ownership continued to evolve during the middle of the 2010s. By 31 December 2015, Nangang United had reduced its direct holding in NISCO to 48.19%. Fosun International also appointed Nanjing Iron and Steel Group as proxy for a 10% interest in Nangang United. This arrangement meant Nangang United was treated as a joint venture rather than being consolidated in Fosun International’s financial statements, while Nanjing Iron and Steel Group regained joint-control status over the listed steel company. The wider structure included Fosun-related shareholders, the Nanjing municipal government through an investment group, employee interests and public shareholders. Around 2016, NISCO entered into an agreement with banks and other parties for a debt-to-equity swap involving its subsidiary Nanjing Nangang Industrial Development. The capital increase was completed in 2017. In the same year, NISCO conducted a private placement that issued approximately CN¥1.788 billion in new shares. These transactions reflected the capital-intensive nature of steelmaking and the company’s efforts to adjust its financing and ownership arrangements. NISCO was included in the SSE 380 Index from December 2015 until December 2017. World Steel Association data placed it 45th in the world by steel production in 2015, with reported output of approximately 8.590 million metric tons. Its history therefore combines the development of a major regional steel plant, the corporatization and stock-market listing of part of the operation, repeated ownership reorganizations, related-party asset transfers, raw-material trading relationships and later balance-sheet restructuring.

1. 2017Debt-to-equity swap and private placement completed

   The subsidiary-level capital increase associated with the debt-to-equity swap was completed, and NISCO issued approximately CN¥1.788 billion of new shares through a private placement.

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2. 2017SSE 380 Index membership ended

   NISCO ceased to be included in the SSE 380 Index after the December 2017 review period.

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3. 2015Ownership and index inclusion changes

   Nangang United’s direct holding fell to 48.19%, while NISCO became a constituent of the SSE 380 Index in December.

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4. 2015Global production ranking reported

   World Steel Association data ranked NISCO 45th worldwide by steel production, with output of approximately 8.590 million metric tons.

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5. 2011Investment in All Wealthy Capital

   NISCO acquired a 10% interest in All Wealthy Capital for US$50 million; the investment was later reversed after the planned initial public offering failed.

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6. 2010Related-party steel assets acquired

   NISCO acquired assets from its direct parent through an all-share transaction with a stated nominal value of CN¥9.1 billion.

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7. 2009Intermediate holding company created

   Nanjing Nangang Iron and Steel United was established as a new intermediate holding company in the ownership chain.

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8. 2003Nanjing Iron and Steel United joint venture formed

   Nanjing Iron and Steel Group placed its interest into a joint venture with Fosun-related private-sector investors.

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9. 2000Shanghai Stock Exchange listing

   NISCO became publicly traded on the Shanghai Stock Exchange.

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10. 1999Nanjing Iron and Steel Company incorporated

    Nanjing Iron and Steel Group spun off part of its plant operations and incorporated the listed-company predecessor of NISCO.

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11. 1958Steel plant established in Nanjing

    A steel plant was founded in Nanjing, establishing the industrial base from which the later Nanjing Iron and Steel corporate group developed.

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A large Chinese industrial steel producer serving construction, manufacturing, infrastructure, energy, transportation and other heavy-industry customers.

• Steel plateFlat steel

  NISCO manufactures steel plate for industrial customers and heavy-duty applications. Plate products are used across construction, machinery, energy, transportation, shipbuilding and other sectors requiring large, flat steel components. The company’s plate business is part of its broader production and sale of steel materials rather than a consumer retail offering.

• Structural sectionsLong steel

  Structural sections and related long-steel materials serve construction, infrastructure and equipment-manufacturing customers. These products are supplied as industrial inputs and are associated with the company’s steel-smelting, rolling and materials-sales operations.

• Specialized industrial steelSpecialty steel materials

  The company also produces steel materials for specialized industrial uses. The available reference material does not identify individual grades or branded product families, but places these outputs within NISCO’s wider ferrous-metal processing and steel-sales portfolio for heavy-industry users.

• 2017Private placement of new sharesOther

  The company was adjusting its capital structure after the subsidiary-level debt-to-equity arrangement.

  What changed. NISCO issued approximately CN¥1.788 billion of new shares through a private placement.

  Aftermath. The issuance provided additional equity capital, although the available reference does not specify its subsequent use or impact on ownership percentages.

  Private-placement proceeds or stated issue amount. Approximately CN¥1.788 billion (2017)

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• 2016Debt-to-equity swap agreementStrategy

  The capital-intensive steel business required a restructuring of financing arrangements involving Nanjing Nangang Industrial Development, a NISCO subsidiary.

  What changed. NISCO signed an agreement with banks and other parties for a debt-to-equity swap and a related capital increase in the subsidiary.

  Aftermath. The capital increase was completed in 2017, alongside a separate private placement by NISCO.

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• 2010Acquisition of parent-held industrial assetsM&A

  NISCO had business relationships with businesses held by its direct parent, and those assets were treated as related-party businesses within the corporate group.

  What changed. The listed company acquired assets organized in Nanjing Nangang Industrial Development through an all-share transaction with a stated nominal value of approximately CN¥9.1 billion.

  Aftermath. The transaction transferred additional steel-related assets into the listed company and increased Nangang United’s holding in NISCO to 83.78% at that point.

  Stated nominal value of consideration. CN¥9.1 billion (2010 transaction)

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• 2017Capital increase and private placement completed

  The capital increase associated with the subsidiary debt-to-equity swap was completed, and NISCO issued approximately CN¥1.788 billion of new shares through a private placement.

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• 2017NISCO leaves the SSE 380 Index

  NISCO ceased to be a constituent of the Shanghai Stock Exchange’s small-cap SSE 380 Index after having been included from December 2015.

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• 2016NISCO enters a debt-to-equity swap arrangement

  Nanjing Iron and Steel Company agreed with banks and other parties on a debt-to-equity restructuring involving its subsidiary Nanjing Nangang Industrial Development.

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1. Nanjing Iron and Steel Company