Two years after launching the proposal to privatise AsiaInfo-Linkage, CITIC Capital Partners has closed the transaction, completing its sixth take-private deal, according to a company statement.
The deal, worth approximately $900 million, is the second largest take-private of a Chinese company following the $3.7 billion Focus Media privatisation by a consortium of private equity investors, including CITIC, The Carlyle Group and FountainVest Partners, which closed in 2013.
The AsiaInfo deal was led by CITIC and China Broadband Capital. CITIC had established a 15-year long relationship with the founder, said Brian Doyle, managing partner at the firm, who spoke to Private Equity International.
“We have been tracking this company since it was founded. The company went public in 2000 and we’ve watched it with great interest since then,” Doyle said. “My partner Yichen Zhang served on the board of the company for roughly two years between 2007 and 2008 and in that process got to know the business quite well.”
CITIC first launched the take-over deal in January 2010. Doyle explained that the process lasted two years as the transaction required approval from Chinese regulators, which can take a long time.
“These deals always take a year. In this case, because of the added complexities relating to China and the domestic approval process, it took more. [With] AsiaInfo, you are touching an important topic, which is the Chinese telecom sector, so there is naturally going to be a lot more scrutiny for these businesses given the nature of touching the restricted sector of telecoms.”
CITIC’s deal is the second such transaction to close this week. PEI reported earlier that NewQuest Capital Partners completed the privatisation of China Hydroelectric Corporation, the most recent of a number privatisations of US-listed Chinese companies in recent years.
“One of the issues when investing in China is transparency of the companies and there is more transparency in a public company in China than a private company, particularly if the company has been listed in the United States for 10 years and has been going through regular reporting processes,” Doyle explains, adding that it is a lot more work to get comfortable with private companies in China.
CITIC Capital Partners is currently investing from its second China buyout fund, which is $925 million, according to the firm. The vehicle is about 65 percent deployed and CITIC is considering a successor fund in about a year’s time, according to the firm.