Stock Reform of Shenzhen Development Bank

Posted: 13 Mar 2012

See all articles by Lin Jin

Lin Jin

affiliation not provided to SSRN

Liao Li

affiliation not provided to SSRN

Aldo Sesia

Harvard Business School

Jianyi Wu

affiliation not provided to SSRN

Date Written: June 3, 2011

Abstract

Shenzhen Development Bank, China's first publicly traded company, was undergoing the non-tradable share reform. Its current controlling shareholder, private equity firm Newbridge Capital LLC, needs to negotiate with its diverse minority shareholders to find a compromise on the terms of the conversion of the non-tradable shares held by Newbridge into tradable shares. Further delay in implementing this reform will put Shenzhen Development Bank into jeopardy as the bank will not be allowed to raise the additional capital it very much needed, but the negotiation between Newbridge and other shareholders was breaking down. The case discussed the non-tradable share reform in China, its causes and its implications, and from the perspective of one private equity play, discussed the issues of corporate governance, conflicts of interest, and the fiduciary duty of corporate managers in an emerging market.

Learning Objective: This case is used in a course on investment and finance in emerging market, to showcase the intricate interactions between controlling shareholders, minority outside shareholders and the corporate managers. It also laid a vivid discussion of the non-tradable share reform in China, carried out in the 2005-2007 period, which fundamentally changed the characteristics of the Chinese capital market.

Suggested Citation

Jin, Lin and Li, Liao and Sesia, Aldo and Wu, Jianyi, Stock Reform of Shenzhen Development Bank (June 3, 2011). Harvard Business School Finance Case No. 211-080, Available at SSRN: https://ssrn.com/abstract=2020434

Lin Jin (Contact Author)

affiliation not provided to SSRN ( email )

Liao Li

affiliation not provided to SSRN ( email )

Aldo Sesia

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-496-2085 (Phone)

Jianyi Wu

affiliation not provided to SSRN ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
1,731
PlumX Metrics