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FEBRUARY 2007 Issue
In BriefAustralia & Taiwan Enjoy Soaring foreign private equity inflow. An analysis of their meteoric rise Feature
Infrastructure Funds Are In Vogue after an absence of more than six years Funds
Buyout Deals Are In The Making in Australia adding to US$15 billion Buyouts
Telecom NZ to Buy PowerTel allowing TVG Capital to repeat another success Divestment
Deals Waiting to be Signed Off amount to US$20 billion in this region Greater China - Investments
Singapore Has Emerged As a Centre for China PIPE deals Greater China - Investments
Alliances With Locals Are Key to deal making in China Greater China - Growth/Expansion
Focus Media’s 4th ADS Offer returns hefty capital to its investors Greater China - Divestment
Deal Sizes Are Getting Bigger in India as investors’ confidence rises India Corner - Growth/Expansion
PE In Japan Remains Local even though others push for a pan-Asian agenda Japan Corner
Public-to-Private Is The Route for a ball bearings company’s corporate agenda Japan Corner - Buyouts
Goldman & Sanyo Are Selling Out as the leasing finance company’s balance sheet returns to black Japan Corner - Divestment
Content
Pan Asia
News
Funds
Buyouts
Growth/Expansion
Divestments
Greater China
News
Tianjin Takes Steps to Shape Its Role in China’s Capital Market
China Records Wage Hikes and High Management Turnover
A 5% Trading Band Imposed to Shenzhen Development Bank
Regulators Scrutinise China Network
Investments
Growth/Expansion
Divestments
India Corner
News
Funds
Growth/Expansion
Japan Corner
General
Funds
Buyouts
Divestments
People on the Move
Summary
Index & Exchange Rates
Islands of Promises
For more than half a decade, global buyout investors have been infrequent visitors to Australia and Taiwan, but this changed in 2006. In those fleeting 12 calendar months, both have firmly anchored their positions in the ocean of deals. The largest island in the Southern hemisphere, Australia led all Asian markets in recording a stunning deal value that added up to US$14.1 billion. Although Taiwan trailed behind a number of markets in the region, non-domestic private equity investors committed no less than US$3.57 billion in the island (fig.1). This, compared to the negligible US$60.1 million in the preceding 12 months, was an outstanding achievement. Significantly, both Australia and Taiwan had long been off private equity investors’ navigation charts. Their meteoric rise to prominence in the Asian private equity deal landscape testifies to private equity investors’ efficiency in seizing emerging opportunities, as well as breaking new ground in virgin buyout frontiers. More importantly, the latest investment direction is an expression of global private equity investors’ investment parameters.
Australia
Within the vast oceans of Asia, Australia and Japan are the two developed economies. Yet their respective economic fact sheets are poles apart. According to the Economist, Australia’s gross domestic product (‘GDP’) in 2006 was estimated at US$741.2 billion, trailing far behind the US$4.5 trillion GDP commanded by Japan in 2005. Despite its relatively smaller economic size, Australia has proven its ability to imprint its name on the Asian private equity deals charts. Its 2006 investment aggregate accounted for 27.9% of the year’s total for Asia. It is not only a fertile land for buyout investors, but also home to mega deal sizes that is commensurate with global buyout investors’ appetite. Until recent years, with the exception of CVC Asia Pacific, most fund managers of Pan-Asian firms did not sail across...
This online issue of the Asia Private Equity Review is made available with abbreviated content. To read the full content together with more in-depth news, perspectives, and analysis, please subscribe or contact us to purchase back issues.
Greater China- NewsTianjin Takes Steps to Shape Its Role in China’s Capital Market
The Tianjin government is planning to set up a domestic marketplace that would facilitate both foreign and domestic investors to transfer their shares. The architect behind such a concept is Mr Dai Xianglong, former governor of the People’s Bank of China. Mr Dai is also the man behind the Bohai Industrial Investment Fund (‘Fund’) which has already received 6 billion yuan (US$750 million) from a host of state-owned enterprises. The Fund, being the first yuan-denominated investment vehicle that seeks opportunities in the Bohai region, has appointed the private equity investment arm of Bank of China International as its fund manager. It has a final target of 20 billion yuan.
Tianjin government’s move indicates rising competition amongst major cities in China to vie for a role in the country’s burgeoning capital market.
China Records Wage Hikes and High Management Turnover
To the employed, 2006 was a good year, especially for those in the middle ranking management living in one of the major cities.
According to a report by Mercer Consulting Ltd., in 2006, China joined other markets in Asia and experienced not only wage rises but also high management turnover problems. On average, wages have increased from 7.2% to 7.7% in China’s three major cities, Beijing, Shanghai and Guangzhou. At the same time, companies witnessed record middle ranking management turnover, as high as 31%, during the period under survey. The internet operating companies were the hardest hit with employees demanding wage increases as much as 8.3%.
A 5% Trading Band Imposed to Shenzhen Development Bank
With the deadline for listed companies to convert all non-tradable shares to tradable shares having passed, China Securities Regulatory Commission imposed a 5% trading band width for all those that have not been able to complete such a reform in their shareholder structure. Among them is Shenzhen Development Bank which is controlled by TPG Newbridge Capital.
In November last year, TPG Newbridge Capital’s proposed share reform plan that was to align with the share price movement. The plan failed to receive the endorsement of one of the major existing shareholders of Shenzhen Development Bank. As a result, until Shenzhen Development Bank carries out its share reform, its shares are prohibited from changing hands 5%.
Separately, Shenzhen Development Bank announced that it is extending the deadline of dialogues with General Electric for the latter to inject capital to the lender. Shenzhen Development Bank is seeking to invite General Electric to take up a 7% equity stake in it.
Regulators Scrutinise China Network
Although it has been more than two months since MBK Partners has won over its rivals in taking a 60% controlling position in China Network Systems Co. Ltd. (‘China Network’), Taiwan’s largest cable TV operator, the deal remains under the watchful eye of domestic regulators. According to Taiwan’s Economic Daily, the island’s broadcasting commission is seeking to clarify the real source of capital that finances MBK Partners’ acquisition of this deal.
Headquartered in Seoul, MBK Partners’ commitment to China Network was made through two separate investment vehicles, Crowns Ltd. and Commander Ltd.. It has agreed to a payment of NT$309 billion or US$936 million in becoming a 60% shareholder in China Network.
Taiwan policy makers’ attention to this buyout transaction highlights foreign buyouts capital’s increased role in the island’s capital market.