Report: Bain, Silver Lake compete for China’s Huawei

The two private equity firms are reportedly left in the race for a controlling stake in Huawei Technologies’ mobile business unit, in a deal that could be worth $4bn.

Bain Capital and Silver Lake Partners beat out earlier suitors such as Kohlberg Kravis Roberts and the private equity division of Goldman Sachs, to submit formal offers for a stake in Huawei Technologies’ mobile products unit, according to a report from Reuters.

The deadline for formal offers was last Friday. The Financial Times reported in July that any deal was likely to value the company at about $4 billion (€2.5 billion).

Huawei, a private telecommunications network company, is made up of five business groups which include mobile products, laptop data cards and home-use routers. Its mobile products unit doubled revenues to more than $2 billion last year, sources told Reuters. The Shenzhen-based company is seeking a US partner to help grow its presence in the US.

Huawei hired Morgan Stanley to auction the unit in May and was prepared to divest 49 percent, but may sell a larger stake if it is offered a premium. The report said that while a firm may pay a premium for a more than 50 percent stake in the business, downward pressure on the mobile devices sector and turmoil in financial markets make it less likely buyers will pay up. It is possible that Bain and Silver Lake could team up and buy the stake, with other parties rejoining the deal as well, sources said.

According to the Financial Times, Bain is likely to win the bid as it has a previous relationship with Huawei. Earlier this year, Bain and Huawei attempted to acquire US IT networking company 3Com. The deal was abandoned due to US regulatory concerns about national security.