Global buyout firm the Carlyle Group is reported to be the front-runner to acquire a stake of up to 80 percent in Chinese company Xuzhou Construction Machinery Group, for a price expected to be between $300 million and $400 million (€397 – €530 million), according to a report in the Wall Street Journal.
If successful the transaction, which is expected to close by mid-2005, would be the first LBO of a Chinese firm by a foreign private equity firm.
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Such a deal would represent a departure from private equity firms' usual practice of taking only minority stakes in Chinese companies using their own capital.
The report said that finance could remain a sticking point, due to both the complexity of China's regulatory structure and the limited amounts of Chinese currency to which foreign banks have access.
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Xuzhou, based in Jiangsu province near Shanghai, makes construction equipment for roads, mines, and buildings. The report suggested it is on course to make sales of nearly $3 billion this year.
Earlier this month, pan-Asian private equity firm Newbridge Capital, owned by Texas Pacific Group and Blum Capital Partners hired Timothy Dattels as a managing director and John Olds as a senior advisor.