NewQuest Capital Partners, an Asia-focused direct secondaries fund, has put in an offer to acquire all outstanding shares in China Hydroelectric Corporation, according to a statement from the target company.
NewQuest declined to comment on the transaction.
The bid, which is a non-binding proposal, offers a price of $0.99 per ordinary share or $2.97 per American depository share, according to the statement. The offer represents a premium of 33.2 percent over the closing price of the ADSs on 3 September 2013 and a premium of 35.8 percent over the volume-weighted average closing price of the ADSs during the last 30 trading days.
NewQuest currently owns 49.83 percent of the business and has a previous agreement allowing it to acquire options and warrants that would make its stake 56.8 percent.
However, NewQuest’s proposal letter specifies that the proposal constitutes only a preliminary indication of its interest, and is subject to negotiation and execution of definitive agreements.
Asia's private equity firms bet big on
China Hydroelectric owns, develops and operates small hydroelectric power projects in China. Other private equity firms have solidified their interest in the hydropower sector recently too.
In September last year, a consortium of private equity investors injected $150 million into China-based hydropower plant operator Zhaoheng Hydropower for the second time, Private Equity International revealed earlier. Olympus Capital led the consortium in both rounds of fundraising, with FountainVest Partners and Morgan Stanley's infrastructure arm making up the balance.
The deal took the consortium’s total investment in the business to $300 million, the largest private investment ever in China’s renewable sector, according to the firm. The trio had originally invested $150 million in the business in December 2010.
The NewQuest team spun out of Bank of America Merrill Lynch and is made up of former executives from the bank’s Asia private equity team. The firm launched its debut vehicle in 2011, which raised its target amount of $400 million, according to PEI’s Research & Analytics division.