KKR-backed Rundong plans HK IPO

The IPO exit on the HKEx is expected to raise $300m.

Kohlberg Kravis Roberts is gearing up to exit China-based Rundong Automobile Group through a public listing on the Hong Kong Stock Exchange, according to a report from IFR. KKR invested an undisclosed sum in the business four years ago.

Rundong, a luxury car dealership in Eastern China, will list during the first half of the year and aims to raise about $300 million.

The listing would come after a rise in demand in China’s automobile sector recently, as well as an uptick in activity on the HKEx toward the end of last year.

Other private equity investors that have tapped the automobile sector include China Resources Capital, which teamed up with Dutch pension fund asset manager APG last February to establish a $265 million fund focused on investing in city car parks in China, Private Equity International reported earlier.

In July, CDH Investments proposed to take a majority stake in New Focus Auto Holdings through the acquisition of $97.4 million worth of its stocks and bonds.

Some Chinese automobile companies have attracted investors in Hong Kong previously, although the recent slowdown in IPO activity in Hong Kong and China has prevented a large number of businesses from going public.

In May 2012, Baring Private Equity Asia was the largest cornerstone investor in China Yongda Automobiles’s initial public offering, which raised about $433 million, PEI reported earlier.

Baring had an upsize option in the transaction and invested between $96 million and $120 million. The Oman Investment Fund joined Baring as the company's second cornerstone investor, but only committed a relatively “small amount” to the listing.

An exit for KKR from Rundong would add to its increasingly active Asia operations, which includes its 5x exit from Korea’s Oriental Brewery, which expects to close in the second quarter of this year. The firm invested $360 million in the beer maker in 2009 and expects to sell it for about $1.9 billion, according to the firm.