Beijing Enterprises' China Gas play may be nationwide expansion vehicle

Energy-to-brewery conglomerate Beijing Enterprises Holdings may use its China Gas unit as a vehicle for nationwide expansion in gas distribution, raising the risk of a boardroom clash over strategy, analysts say.

Beijing Enterprises Holdings (BJE) said yesterday that it had agreed to buy the 22.01 per cent stake held by parent company Beijing Enterprises Group (BJG) in city-gas distributor China Gas for HK$8.22 billion.

Although the ownership transfer from the parent to BJE does not immediately affect China Gas shareholders, the fact that BJE will own 22 per cent of the company - slightly more than China Gas chairman Liu Minghui's 21.12 per cent - could lead to changes in management at China Gas.

BJG's holding exceeded that of Liu earlier this month after it bought shares in the open market at HK$8.21 to HK$9 each.

Asked if BJE would seek to exert more management control over China Gas, chief financial officer Jimmy Tam Chun-fai told the : "[BJE] will definitely demand more board seats and even some important positions."

BJG nominated Chen Xinguo to be a China Gas executive director in April. Chen is a former deputy general manager of Beijing Gas Holdings, the gas distribution subsidiary of BJE.

Tam said details about potential collaboration and "synergies" would be unveiled in a circular to independent shareholders in about 20 days.