Apax backs US listing of SEEK’s China arm

The firm will invest $15m in the online recruitment business’ anticipated $816m IPO.

Private equity firm Apax Partners has pledged to buy $15 million worth of shares in Chinese recruitment business Zhaopin, ahead of its initial public offering, according to a registration document filed with the US Securities and Exchange Commission.

Zhaopin is the China unit of Australian online job searching business SEEK, which has opted to list its Chinese arm on the New York Stock Exchange.

Between 5.6 million and 6.5 million American depositary shares will be offered in the IPO, with each ADS representing two Class A ordinary shares, according to the filing.

The latest registration statement includes a price range per ADS of $12.50 to $14.50, valuing Zhaopin at an equity value of between $700 million and $816 million.

SEEK is the majority shareholder in Zhaopin with a 79 percent share in the business. It will remain the major shareholder following the transaction.

SEEK had been contemplating between a US and a Hong Kong listing, but opted for a US listing after the business decided it was more prestigious, an analyst close to the deal told Private Equity International.  

“The main reason was more listings tend to be done in the US – to the management team it seemed to be more prestigious [and this] was to attract and retain staff and customers. Our read on it is [this is] particularly [the case] for Chinese companies.”

He adds that the recent decision of The Alibaba Group to list in the US has had some impact on the perception of US stock exchanges versus the HKEx, with the US seeming a more attractive place to list now.

“I think Alibaba had different reasons to list in the US [itself], but that was a consideration [for Zhaopin]. As an observer of the market, there seem to be a lot more Chinese companies listing in the US than in Hong Kong.”

Apax, a UK-based private equity firm, has a strong network in China, recently enjoying success selling its 56 percent stake in Tnuva, one of Israel’s largest food companies, to Bright Food Group, one of China’s largest food and agriculture businesses.

Financial details of the transaction were undisclosed, but the enterprise value was approximately $2.5 billion, with the divestment, which is subject to regulatory approvals, yielding Apax a 5x return, PEI reported earlier.

PEI’s source continued, “SEEK has a high regard for Apax and a long-standing relationship, and was looking for an opportunity to work together. They have good experience in China and [SEEK] is looking to expand in China and looking to grow its geographical footprint.”