Posted on Tumblr on Sep 30.

After listing in New York through a reverse merger, then going private in 2012 with CDB money, chairman Tu Guoshen 涂国身 is now marching a subsidiary of China Security and Surveillance Technology (中国安防技术有限公司) towards another reverse takeover – only this time in Shanghai. CSST had aired an intention to list domestically right after going private, but an IPO is not an option at the moment: a 900-long queue has grown since China suspended IPOs last year. It’s a peculiar operation. First, Feilo (上海飞乐股份有限公司), the Shanghai-listed auto part manufacturer expected to buy CSST subsidiary China Security and Fire Technology (中安消技术有限公司), isn’t quite a shell: it’s reported to have a higher revenue than CSST, yet they’re planning to abandon their current business. Shanghai city gov’t-owned Inesa (上海仪电控股集团公司) owns about a sixth of Feilo. Second, Feilo is said to be paying about $750m for one unit of CSST. That’s a third more than gu it cost Mr Tu to delist the whole company last year, and more than ten times Security & Fire’s June net asset value. Rumours that have been around for some time, now joined by unnamed sources on Chinese media, claim that Mr Tu’s success in listing CSST back in 2010 owed more than a bit to creative accounting, and that it was fear of SEC scrutiny what led him to delist it two years later. CSST’s activities abroad have included purchasing a row of Asian security firms (UTC’s HK unit Guardforce among them), as well as some involvement in (not always successful) construction projects in Iceland, Hungary, Australia, Bulgaria and Henderson, Nevada.