Air China has put forward its plans to raise up to $2.9 billion worth of shares in an application to the Shanghai Stock Exchange on Jan. 8. These A-Shares are part of the airline’s private placement from its parent organisation, China National Aviation Holding (CNAH).
The A-Shares
The existing shares being raised by Air China are what’s known as A-Shares. In China, these types of shares are of high importance due to their domestic interest for companies in mainland China, and are valued in renminbi (RMB). For this reason, they are mainly sold on the Shanghai Stock Exchange (SSE), and the Shenzhen Stock Exchange (SZSE). This is in contrast to their B-Shares, which represent foreign investments (but currency can be converted) and are not as exclusive as A-Shares from the mainland. They are also traded differently within each territory, as the Shanghai Stock Exchange values them as US Dollars (USD) while the Shenzhen Stock Exchange values them in Hong Kong dollars (HKD).
Where Are the A-Shares Going?
The A-Shares owned by Air China’s parent company, China National Aviation Holding, are being used to maintain its working capital while also paying off any outstanding debts with the net proceeds to controlling shareholders. China National Aviation Holding also holds a majority stake in domestic shares of Air China, among several other companies such as Air Macau, Shenzhen Airlines and Cathay Pacific, making it the largest shareholder in the country for Air China; itself being a state-owned enterprise funded by the Chinese government and acting as its national flag carrier.
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