CVC sells down 2011 Asia deals

The two partial exits follow the successful raise of the firm’s fourth Asia-Pacific fund earlier this year

CVC has partially exited two investments in the Asia-Pacific region in the last few days.

The firm sold 185.5 million shares in Jintian Pharmaceutical Group, a leading pharmaceutical retailer and distributor in Northeast China which is listed on the Hong Kong Stock Exchange, for HK$3.29 (£0.26; $0.42) per share.

CVC invested $84.1 million in October 2011 to acquire a 24.24 percent stake in the company, and will be retaining a 6.9 percent stake.

Francis Leung, CVC’s managing partner and chairman of Greater China, said in a statement that the partial exit is “in line with our usual process of managing CVC fund investments” and that the divestment has “realised a solid return for our investors”.

When CVC acquired Jintian, the business had 450 retail stores in Heilongjiang province. As of June 2014, this had increased to 838 drugstores, expanding into second and third tier cities in Heilongjiang province as well as neighbouring Jilin and Liaoning provinces.

Jintian listed on the Hong Kong Stock Exchange in December 2013 at $150 million, at which point CVC sold around a third of its shareholding, generating a money-on-money multiple of around 2x, Private Equity International reported in March.

The share price on Tuesday was down 3.08 percent to HK$2.83, giving the company a market capitalisation of HK$5.74 billion.

According to media reports, CVC has also agreed to sell part of its stake in Link Net, Indonesia’s second largest fixed broadband and cable television operator, for between 6,200 rupiah and 6,700 rupiah (£0.32-£0.34; $0.51-$0.55) per share, a discount of between 6 percent and 13 percent on Monday’s closing share price of 7,125 rupiah (£0.37; $0.58).

CVC and Indonesia internet and cable operator PT First Media are reported to be selling a combined stake of 40 percent, which could raise up to $660 million. CVC originally invested $275 million in Link Net in June 2011, before acquiring additional shares to take its stake up to 49 percent.

The deal has reportedly received commitments worth $257 million from nine cornerstone investors, including BlackRock, Morgan Stanley Investment Management and Neuberger Berman.

At press time, CVC could not be reached for comment about the Link Net sale.

The partial exits come several months after CVC closed its latest Asia fund on $3.5 billion, surpassing its $3.3 billion hard cap with the help of a $200 million GP commitment, PEI reported earlier. CVC Asia Pacific Fund IV will focus on businesses benefitting from increased consumer affluence and domestic demand in Greater China, Southeast Asia and Japan and Korea. Its first investment was the acquisition of a majority interest in Asia-wide serviced officer operator The Executive Centre, a secondary buyout from Headland Capital Partners.