Anyone surprised by China's recent $3 billion purchase of a stake in Blackstone should look no further than Anthony Leung. Leung's success as a commercial banker and tenure as financial secretary of Hong Kong alone would have made him a viable candidate for leading Blackstone's effort in Asia, but Leung's marriage to a nationally revered athlete added social cache to his dossier as well. Leung arrived at Blackstone in January 2007. With such a well connected financier in-house, Blackstone's progress in China should be no mystery.
After resigning from his position as Asia chairman of JP Morgan Chase & Co. in 2001, he served as the financial secretary for Hong Kong from 2001 to 2003. Despite his soft-spoken manner, Leung implemented an ambitious agenda. He lobbied to cut the pay of civil servants and signed the Closer Economic Partnership Agreement (CEPA) with China. CEPA aimed to “strengthen trade and investment cooperation between the mainland and Hong Kong”.
Leung's deep ties within the banking community fostered rumours of conflicts of interest during his tenure, but the most damaging misunderstanding of his political career proved to be his purchase of a Lexus. Leung purchased a Lexus just before introducing a tax hike on new vehicles. He eventually resigned in the wake of “Lexusgate” but very much remained in the public eye.
In 2002, Leung married Fu Mingxia, an Olympic diving champion and national celebrity. She won her first gold medal in Barcelona in 1992 at age 13, prompting Olympic authorities to require divers to be at least 14 to compete. She then won a subsequent gold medal in Atlanta four years later, and now serves an ambassador for a non-profit group helping poor farmers in the country. Their courtship and wedding elevated Leung from banker to tabloid darling, prompted not only by their combined stature, but their age difference. Leung was 50 and Fu was 23 at the time of their nuptials.
We don't know exactly how Leung featured in his firm's equity sale to China, but one Hong Kong lawyer with several private equity clients says his past ties and current position as chairman of ICBC, China's largest commercial bank, are obviously significant.
After all, what better face can Blackstone have in China than the architect of CEPA and the husband of a national hero?
LEHMAN BROTHERS POACHES INDIAN MD
Jayanta Banerjee has become managing director of Lehman Brothers' Mumbai office after leaving Mumbai and Bangalore-based ICICI Venture where he was head of growth capital investments. He will assume a wider role at Lehman Brothers and concentrate on mid-market deals in all sectors. Banerjee started at ICICI in 2002. Before that he worked at Ernst & Young. ICICI has not yet announced a successor. ICICI is led by Renuka Ramnath who has been managing director and chief executive of the firm since 2001. The firm recently raised an $810 million (€604 million) fund – India's biggest private equity fund to date.
GLOBAL INFRASTRUCTURE PARTNERS CRACKS ASIA
Private equity infrastructure specialist Global Infrastructure Partners has opened an office in Hong Kong and appointed Mike Nikkel to lead the firm's investment efforts across Asia. Nikkel previously led the development and operations of independent power company OneEnergy – a joint venture between Hong Kong's CLP Holdings and Mitsubishi Corporation. Founded in 2006, Global Infrastructure Partners recently bought the UK's International Port Holdings, a port infrastructure vehicle, and London City Airport. The firm has other offices in London and New York.
MAYFIELD INCREASES INDIAN PRESENCE
US venture capital firm Mayfield has stepped up its Indian focus with the appointment of two investment professionals, Nikhil Khattau and Vikram Godse, to its newly opened Mumbai office. Khattau was previously the founding chief executive officer of SUN F&C Asset Management. Godse was formerly a founding member of India-focused private equity fund JM Financial Investment Managers. The Mayfield team in India will make technology, retail, infrastructure and healthcare investments from a $375 million fund.
YES BANK CREATES FOOD AGRIBUSINESS FUND
India's YES Bank is to raise $100 million (€75 million) for a new private equity fund to invest in food and agribusiness sectors – the first of its kind in India. The fund will invest in companies in “high growth areas” including grain based products, milk and dairy products, spirits and beer and tea and coffee. Sonal Shah, senior director of the bank's agribusiness fund management, will head the fund in New Delhi. The investments will range between $5 million and $7.5 million. The Bombay-listed private bank was founded in 2003 and its investors include Citigroup Ventures Capital International, Indian private equity firm ChrysCapital and Hong-Kong based AIF Capital.
APAX TO MAKE DEBUT INDIAN INVESTMENT
London-based Apax Partners is to acquire Bombay and New York-listed Patni Computer Systems, an Indian software company, for $800 million (€600 million). The deal would be Apax's first ever Indian deal since it opened an office in Mumbai in November. It would also be India's second biggest buyout to date – coming in just behind KKR's $900 million buyout of Flextronics Software Systems in April 2006. At press time, rival buyout firms Blackstone and Carlyle were reportedly to be chasing the company as well. Founding brothers Gajendra and Ashok Patni are thought to be selling the 28 percent stake while General Atlantic Partners is reported to be selling the 21 percent stake that it bought for $100 million in 2002.
EVOLVENCE INDIA INVESTS IN JM FINANCIAL
Evolvence India, a London-listed fund of funds, has invested $20 million (€14.8 million) in JM Financial's $225 million India fund alongside lead investor Old Lane Partners. The fund's investments include Genesis Colour, a high-end retailer, Sona Group, an automotive components manufacturer, and International Tractors, a tractor manufacturer. Evolvence India has committed to seven Indian funds including those managed by Baring India Private Equity, IDFC Private Equity and Leverage India.
AUREOS BACKS THAI FOOD CHAIN
Emerging markets buyout firm Aureos has invested $4.2 million (€3.1 million) from its South East Asia fund in Bangkok-based Hot Pot restaurant chain. Hot Pot operates 60 outlets and is seeking to expand to 180 outlets during the next five years. The deal is the firm's eighth investment from its South East Asia fund, which has $91 million of committed capital, and which targets midmarket companies in Indonesia, Thailand and Vietnam. Aureos is currently raising a $300 million Latin America fund and a $100 million Central Asia fund.
MEKONG INVESTS IN VIETNAMESE PHONE RETAILER
Mekong Capital, a Vietnam-focused private equity firm, has invested up to $4.5 million (€3.4 million) in Mobile World Joint Stock Company, known locally as The Gioi Di Dong, a mobile phone retailer chain in Ho Chi Minh City. Founded in 2004, the business has since won a 20 percent market share in Ho Chi Minh City. The investment has been structured as a convertible loan to the company for capital expenditure and to facilitate its expansion plans. The investment is the third from Mekong Enterprise Fund II, a $50 million vehicle launched in 2006. Mekong is raising another fund aimed at capturing opportunities resulting from the privatisation of some of Vietnam's state-owned companies.
LONGREACH BUYS IN TAIWAN
The Longreach Group, an Asian private equity firm with offices in Tokyo and Hong Kong, has agreed to acquire a controlling stake in EnTie Commercial Bank in Taiwan in a transaction worth NT$23 billion ($692 million; €520 million). The deal, subject to regulatory approval, involves the injection of NT$18.8 billion worth of new capital and the purchase of 442 million secondary shares worth NT$4.2 billion from Hung Tai Group, the bank's major shareholder. Hung Tai has also agreed to subscribe to NT$11 billion in convertible bonds issued by EnTie. Longreach will hold 51 percent of the bank and have seats on EnTie's board as well as the right to make senior management appointments. Prior to entering into Taiwan, Longreach's $750 million fund made two investments in Japan, one in 2005, and another last year. The EnTie Bank transaction is Longreach's largest investment to date.