Industrial Bank (HK branch): taking a leadership role within Asian structured finance

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By showcasing its innovative financing capabilities and strategic approach to execution, the key role that Industrial Bank Co., Ltd. (a joint stock company incorporated in the People's Republic of China with limited liability), Hong Kong Branch played on Ascendent Capital Partners’ acquisition of Hollysys Automation Technologies secured a ‘Best Structured Finance Deal’ award from FinanceAsia.

March 04, 2025

Trusted financial partners are important to the successful completion of any transaction, but especially when markets are volatile and prone to fluctuating without warning. 

This quickly became clear when private equity firm Ascendent Capital Partners (ACP) embarked on the acquisition of Hollysys Automation Technologies, a leading supplier of automation and IT solutions in China – with a well-structured financial and strategic approach that proved crucial to the deal being finalised in July 2024.

The transaction set a new precedent within the Asia Pacific structured finance landscape. Notable was how it overcome the significant challenges it posed for all parties involved, due to substantial financing requirements, an extended timeline and the intricate structure involving both domestic and international parties.

At the heart of the solution was crucial financing provided by Industrial Bank (HK branch). Acting as sole financial arranger, the bank provided a $1.055 billion loan representing around 70% of the acquisition cost – in turn ensuring this financing formed the backbone of the entire financial package.

Securing a highly desirable target

Established in 1993, Beijing-based Hollysys had long been recognised for its dominant market presence and world-class R&D team in China’s competitive industrial automation industry. Yet the company struggled with dispersed ownership and a lack of controlling stakeholders.

This made it an appealing target for ACP, which has headquarters in both Shanghai and Hong Kong, and has invested across advanced manufacturing, healthcare and consumption sectors. Further, the transaction leverages ACP’s expertise in privatisations. 

However, to create a positive outcome for all parties, the financing had to be structured in a way that ensured not only the transaction’s immediate viability, but could also mitigate the risks associated with uncertain market conditions and potential regulatory hurdles. 

Pricing was a key feature of the deal’s success. ACP’s offer of $26.50 per share represented a 24% premium over Hollysys' previous month trading price of $21.38 in mid-June 2024. It was structured that way to provide maximum value to Hollysys shareholders.

As a result, the transaction met its performance targets. It closed on schedule and, ultimately, all payments were made in cash – a testament to the strength and reliability of Industrial Bank (HK branch) financial support and planning by ACP. As part of this, the stable financing ensured the acquisition could provide long-term strategic direction, enabling Hollysys to focus on strengthening its position in China’s rapidly growing automation industry.

At the same time, backed by Industrial Bank (HK branch) structured loan, ACP as the fully-funded bidder could make a competitive cash offer, surpassing other bids in both value and certainty. 

Navigating complexity and risk

Creating this type of confidence and differentiation in ACP’s bid was a key step in overcoming various challenges – from market competition, to regulatory hurdles, to internal stakeholder concerns. In short, the deal’s smooth completion was largely due to the strategic foresight of the bidder and its financial partners.

Such an approach was vital given the complexity of the bidding process. As a compelling target, Hollysys attracted multitude of unsolicited bids, each vying for attention. While some rumoured bids may have signalled higher headline price points, they were shadowed by ambiguous financing arrangements and highly uncertain funding sources and conditions. Consortium members typically lacked a meaningful track record in executing acquisitions.

By contrast, ACP offered deep sector knowledge and experience, reputable underwriting standards and reliable financing from Industrial Bank.

The bank also played an important role in managing stakeholder expectations and related risks, stemming largely from Hollysys' dispersed ownership and lack of a controlling shareholder. 

By ensuring transparency throughout the acquisition process, ACP could mitigate the risk of post-deal disputes, especially given the public nature of Hollysys' sale. 

A financing pioneer

In setting a new standard for structured finance deals in the region, Industrial Bank (HK branch) innovative approach with this deal spotlighted its ability to provide customised solutions regardless of scale.

Yet Industrial Bank (HK branch) role went beyond financing. The deal demonstrated a strategic vision to identify Hollysys as a valuable asset and complete the privatisation through thoughtful planning and execution as part of a highly competitive bidding process. This also enabled ACP to provide a comprehensive solution that addressed key priorities, including optimising shareholder value and securing long-term stability for the company.

More broadly, the outcome reflects the critical role of local financial partners in large and cross-border structured finance deals in China and beyond, particularly in navigating regulatory environments and market volatility.

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