TPG in $715m China exit

The David Bonderman-led private equity firm has sold UT Capital Group to Haitong Securities as it continues raising its $3.5bn Asia fund.

Global private equity firm TPG has sold UT Capital, a Chinese leasing business, to Haitong Securities subsidiary Haitong International Holdings in a deal worth $715 million, according to a company statement. 

TPG initially invested in the company in 2008. The firm owned 100 percent of the business, whose main operating subsidiary is UniTrust Finance & Leasing Corporation, and has since grown total assets of the company at about 55 percent per year, according to the statement.

On entry, the firm replaced company management and built out its processes to provide leasing services to nine sectors from just one sector, a source close to the firm told Private Equity International. The sectors include healthcare, education, machine tools, printing and packaging.

One of the reasons Haitong was so interested were the [number of platforms] and the SME customer-base that [UT] had, which is a very strong and growing base of businesses in China and emerging markets.

Industry source

“The two biggest things [TPG] did was diversify the portfolio and diversify the funding base. To get those things right around a very strong credit [base] and leadership and management, you can end up building really a heck of a business,” the source said.

“One of the reasons Haitong was so interested were the [number of platforms] and the SME customer-base that [UT] had, which is a very strong and growing base of businesses in China and emerging markets.”

TPG has exited a “large majority” of its China-based businesses through trade sales and expects another such exit this year. 

The firm is actively exiting its Asia portfolio, selling 24.26 percent of Indonesian commercial bank Bank Tabungan Pensiunan Nasional (BTPN) to Japanese Sumitomo Mitsui Banking Corporation alongside Northstar Pacific Partners in May. The parties had a pending authorisation to sell another 15.74 percent, with the deals combined worth a potential $1.52 billion and gaining the firm a 7x return, a source with knowledge of the matter told PEI earlier.

The firm is currently raising a $3.5 billion Asia fund, which was rumoured to be planning a second close on $2 billion in June this year, media reports said earlier. The firm was originally targeting $4 billion, but decreased the target. 

Industry sources say the firm has struggled with the fundraise, particularly compared to Kohlberg Kravis Roberts, which raised $6 billion for its Asia Fund II earlier this year, PEI reported earlier. TPG declined to comment on fundraising.