Research On The Motivation And Economic Effect Of The Spin-off And Listing Of Tianneng Power

Under the background of highly developed economic globalization,enterprises will continuously expand their operation scale,most of them choose various ways such as mergers and acquisitions,restructuring,diversification,new subsidiaries,etc.However,the diversification of operation will bring negative synergy effect to enterprises,in order to solve this problem,the contraction capital operation-Equity carve-out was born.China’s spin-offs started relatively late and the development process lagged slightly.It was not until 2004 that China issued the first relevant regulations for spin-offs,and with the increasing improvement of the capital market,on13 December 2019,China Securities Regulatory Commission(CSRC)issued "Certain Provisions for Pilot Domestic Listing of Subsidiaries Belonging to Listed Companies Spin-off",which contains a total of 15 rules on the definition of spin-offs of listed companies,conditions,no spin-offs and how to disclose after spin-off are listed in detail,providing policy support for the spin-offs of enterprises in China.Based on this background,this paper selects a case study of Tennant Power’s spin-off of Tennant Battery Group Ltd.to be listed on the Science and Technology Board.This paper adopts a single case study approach combined with the event study method and the comparative study method to analyse the case of Tennant Power’s spinoff of Tennant Battery Group Co.The background and significance of the topic are firstly explained,and the research findings and theoretical foundations of spin-offs in domestic and international academia are reviewed.Then,the institutional background of the case chosen for this paper,the company profile and the detailed listing process of Tennant Power’s spin-off of Tennant Battery Group Co Ltd are examined fully,and the main motivations for the spin-off are further analysed in the context of Tennant Power’s spin-off case.Afterwards,the effects of the spin-off are evaluated in four aspects: capital market effect analysis,financing effect analysis,operational effect analysis and governance effect analysis.The study concluded that,firstly,the spin-off of a high-quality business segment by a group company is conducive to the development of new financing and fundraising channels and the enhancement of the company’s financing ability.Secondly,spin-offs can alleviate the degree of information asymmetry,and subsidiaries can optimise incentives and enhance management efficiency.Thirdly,spin-offs help companies to specialise their operations,use the funds raised for research and development,and enhance the competitiveness of their parent and subsidiary companies.The result is that a company should firstly,be split according to its strategic plan,secondly,choose high-quality assets to be split,and make a good financing plan before the split to make reasonable use of the funds.