Carlyle to invest up to $194m in Haier Electronics Group
The Carlyle Group will invest up to $194 million in Haier Electronics Group (HEG), a Chinese white goods manufacturer, potentially taking a 9% stake in the company.
Hawaii Asia, a wholly owned subsidiary of Carlyle Asia Partners III, has agreed to subscribe to $137 million in convertible bonds issued by HEG. Assuming there are no adjustments, the bonds will be convertible into 100 million shares priced at HK$10.67 per share, a 12.43% premium on the July 29 closing price of HK$9.49.
The warrants allow Carlyle to invest an additional $57 million through the purchase of 40 million shares priced at approximately an 18.02% to the July 29 closing price.
HEG is the Hong Kong-listed subsidiary of Qingdao-based Haier Group; another subsidiary trades in Shanghai. As part of the deal, Carlyle will have one out of nine directors on HEG's board.
The funds will be used to support Haier's efforts to expand its domestic service and distribution capabilities, particularly in tier-three and tier-four cities. The company came to prominence as one of China's largest washing machine and water heater manufacturers but is now morphing into a services-oriented player, with a focus on distribution, logistics and after-sale service. It already distributes Haier and third party-branded products across nationwide.
"We will support HEG's transformation to a service-oriented company that helps bridge the gap between the developed and underdeveloped markets," said Janine Feng, managing director at Carlyle.
The day before Carlyle and HEG reached their agreement, Haier announced that it would buy Panasonic Corp's Sanyo Electric washing machine and refrigerator units in Japan and Southeast Asia for about $130 million. The deal allows Panasonic to divest Sanyo business lines that overlap with its own, while Haier gets the opportunity to expand its Japan footprint.
Carlyle Asia Partners III was launched in 2007, raising $2.55 billion. Previous investments include China Fishery Group, Chinese dairy firm Guangdong Yashili, and Australian hospital operator Healthscope.
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