Silver Lake in third Chinese deal

The firm has acquired a minority stake in Nobao Renewable Energy, a Shanghai-based energy efficiency technologies provider, marking its third transaction in China.

Silver Lake, the US-headquartered technology-focused private equity firm, has agreed to acquire a minority stake for an undisclosed amount in Nobao Renewable Energy Holdings, a Shanghai-based energy efficiency technologies provider.

The deal is the firm’s third in China, and its first in China’s clean technology industry.

“We think clean technology worldwide and specifically in China would be a very fruitful area for us to focus on, and we do believe that clean technology would be increasingly strategic for the global economy,” Eric Chen, managing director of the firm, told PEI Asia.

Looking ahead, Chen said Silver Lake saw many interesting opportunities in China.

“The technology content of the Chinese economy is increasing very rapidly. We’re encouraged by the general trend that we’re seeing in the local marketplace,” said Chen.

Established in 1999, Silver Lake made its maiden investment in China in March with the acquisition of a 13 percent stake in NASDAQ-listed technology company Spreadtrum Communications. The investment was worth $40 million.

Investing in public companies is one of Silver Lake’s strategies, but Chen emphasised this was only if the investment created a structure that was “compelling” to both parties.

Referring to the Spreadtrum deal, Kenneth Hao, Hong Kong-based managing director and head of Asia at Silver Lake, told PEI Asia earlier this year: “In selective situations, particularly in China, we need to be more flexible on deal size and smaller deals may be the only way to invest in these companies. At Silver Lake we are agnostic on deal structure but religious on capturing deal value.” 

Silver Lake’s second China investment came in August when it acquired a majority stake in Allyes Online Media, a Chinese digital marketing solutions provider, for a total of $182 million.

The Nobao investment was made from the firm’s third buyout fund, which closed on $9.3 billion in March 2008. Although the fund closed slightly below its hard cap of $10 billion, it was more than double the size of its predecessor vehicle.