Bengbu's state fund takes control of Fengyuan Pharma for $89M as founder unwinds $16B debt
What's the deal? Bengbu Investment GroupDealroom has a profile for this one. Try Dealroom → agreed to buy 100.04 million shares of Fengyuan PharmaceuticalDealroom has a profile for this one. Try Dealroom → at 6.41 yuan each — a 21.53% stake worth 641.2 million yuan — under a formal transfer deal disclosed on August 17. Once complete, control passes from Fengyuan GroupDealroom has a profile for this one. Try Dealroom → to the state-owned buyer, and the actual controller shifts from founder Li Rongjie to Bengbu's State-owned Assets Supervision and Administration CommissionDealroom has a profile for this one. Try Dealroom →.
Why now? Fengyuan Group is under acute financial pressure. As of the first half of this year, roughly 99.99% of the group's Fengyuan Pharma holding is pledged, and its outstanding borrowings total about 11.5 billion yuan, with 700 million yuan and 1.5 billion yuan due within six months and one year respectively.
Terms shifted since a July intention deal: the final agreement cut 9.24 million shares and about 59.23 million yuan, because some shares remain in an agreed repurchase-style securities transaction.
Who is Li Rongjie? Once dubbed Bengbu's richest man, Li started as a state factory chief. He built Fengyuan Group from a citric-acid maker into a conglomerate spanning biochemicals, pharmaceuticals, and food, at one point controlling three A-share companies. He became actual controller of the group and Fengyuan Pharma in 2011.
A return to state hands: The deal marks a homecoming. Fengyuan Group's predecessor, a Bengbu citric-acid plant founded in 1977, halted output and became insolvent in 1994. Li was appointed factory chief that October and led its turnaround, restructuring it into state-owned Fengyuan Group in 1998.
The numbers: Fengyuan Pharma's revenue, net profit, and net profit excluding non-recurring items all fell in 2025, with profit dropping faster than revenue. Gross margin slid from 21.76% to 18.37% as higher-margin manufacturing shrank — chemical drugs and formulations revenue fell about 443 million yuan — while lower-margin drug wholesale grew about 142 million yuan.
What could go wrong? The new owner inherits operational and governance problems. In December 2025, a wholly owned subsidiary pledged a 130 million yuan deposit to guarantee loans for Fengyuan Group without board or shareholder approval, and several instances of non-operating fund use by related parties surfaced. The guarantees and funds have since been released or recovered.
The signal: The transfer shows how heavily leveraged private conglomerates are ceding control back to local state capital when debt walls approach. For Fengyuan Pharma, state ownership may steady a business squeezed by falling manufacturing revenue, rising receivables, and thinning cash — but the underlying earnings pressure carried into 2026.
Image credit: Generated with Gemini
Read more: Jiemian
