TPG is reportedly set to divest part of its shareholding in Shenzhen Development Bank (SDB), in which it acquired a roughly 18 percent stake in 2004 for $145 million. The original deal marked the first-ever sale of a controlling interest in a Chinese company to a foreign investor.
The buyout firm is now in negotiations with Chinese insurance major Ping An Insurance, which wants to increase its 5 percent stake in SDB, according to the Financial Times.
TPG originally invested in SDB through its Asian affiliate Newbridge Capital, which it subsumed in April 2006. Although Newbridge purchased a stake of little lower than 18 percent, it constituted a controlling interest in the bank's management by virtue of its being the bank's largest shareholder.
The 2004 deal was a landmark transaction in Chinese private equity, for it was the first ever sale of a controlling stake in a Chinese bank to a foreign investor. The deal took two years to materialise as Chinese stakeholders in the bank allegedly tried to sell their shares to Taiwan company Chinatrust Financial. The private equity firm then filed suit against Chinatrust Commercial Bank, accusing the Taiwan bank of interfering with the firm’s purchase plans. The dispute was eventually resolved and the deal finally went through in 2004.
TPG’s holding in the bank is currently in a lock-up period, set to expire on 20 June. After that date, the private equity firm can sell a stake of up to 11 percent. Based on SDB’s last traded share price of RMB20.00, TPG is likely to realise a return of about 565 percent on its initial investment, according to the Financial Times.
Separately, TPG is also in talks to acquire a stake of less than 15 percent for about $200 million in Indian retail conglomerate Pantaloon Retail, according to Mint, an Indian daily.
TPG declined to comment on either deal.
Last month, TPG agreed to invest RMB550 million in Daphne International, a Chinese footwear company.