Shenzhen-based Transsion, the largest mobile phone vendor in Africa, filed Saturday with the Shanghai STAR Market, saying that it plans to manage cash up to RMB 2.5 billion (USD 353 million), an amount raised from its initial public offering but that stands idle for the time being.
The company, unknown in the west, and in the same Chinese market where it has never sold a phone, has raised nearly USD 400 million in an IPO concluded last September on the Star Market of the Shanghai Stock Exchange.
The planned management tools include structured deposits, fixed-term deposits, and certificates of deposits, which are of good liquidity, added the company.
This filing stirred wide discussions as some questioned why Transsion came to the stock market for financing and then decided to invest almost 94% of the proceeds in financial products.
Five days later, Transsion filed today for a second time to provide additional explanations on the RMB 2.5 billion cash management plan.
It said that the actual cash that would be managed will be far less than RMB 2.5 billion, which is only the quota authorized by the board of directors.
The company pledged that the IPO proceeds will be mainly used in six projects, including a plant in Chongqing, as promised to its investors. It added that developing these projects will take between 1 and 3.5 years, while the cash management tools will last no more than 6 months and can be redeemed easily.
Transsion also announced recent developments on these projects, such as cementing a deal to ensure the required land.
The company holds 48% of the phone market in Africa with its flagship brand Tecno, as well as Itel and Infinix. Its sales network in the continent includes retail shops in Kenya, Tanzania, Ethiopia, Nigeria, and Egypt. The company also has Research and Development (R&D) centers in Nigeria and Kenya.