CVC Capital Partners is to invest HK$2.14bn ($275.7 million; €206.1 million) in Sun Hung Kai Financial (SHKF), a Hong Kong-headquartered non-banking financial services institution.
The investment will be made through the subscription of mandatory convertible notes and the allotment of warrants. If all the notes are converted and warrants exercised, CVC will own up to 19 percent of the enlarged issued share capital of the company, SHKF and CVC said in a statement.
The investment is conditional upon the completion of the SHKF's proposed sale of its holding in Tian An China Investments Company, a property development and investment company in mainland China in which it owns a 38.06 percent stake, for which SHKF has simultaneously entered into a conditional agreement.
Following the completion of the transaction, Francis Leung, chairman of CVC in Greater China, will be appointed as a non-executive director of SHKF.
The investment will be used for the further expansion of SHKF’s consumer finance business’ network in mainland China and for general working capital purposes. United Asia Finance, the company’s consumer finance unit, was established in 2007 and currently operates 20 branches in China and is expected to open another 10 by the end of the year.
“We believe the brokerage and consumer finance sectors in Hong Kong and China have extensive growth potential and that SHKF will be a long-term leader in the market,” Roy Kuan, managing partner of CVC in Asia, said in a statement.
Established in 1969, SHKF offers financial solutions to retail, corporate and institutional clients. Services it offers include wealth management and brokerage, asset management, corporate finance, consumer finance and principal investments. It has an office and branch network of 87 across Hong Kong, China, Macau and Singapore. The group has assets under management of more than HK$60 billion as of 31 December 2009.
In March this year, CVC agreed to sell its 100 percent interest in Malaysia’s Paperbox Holdings, a holding company of GS Paper & Packaging, for an undisclosed sum.
Two months prior, it teamed with Indonesian retailer Matahari Putra Prima to acquire a 90.76 percent stake in department store chain Matahari Department Store for about IDR7.2 trillion (€547 million; $774 million), marking its maiden deal in Indonesia.
CVC has completed 32 transactions in the Asia Pacific region since 1999.