CDH commits $97m to China's New Focus Auto

According to a regulatory filing, CDH agreed to subscribe 1.26 billion in new shares in a worth of $48.69 million of at HK$0.30 apiece. The PE firm has also subscribed to five-year zero-coupon convertible bonds for a total consideration of $48.69 million. The conversion price fro the bonds is HK$0.23 per share.

CDH's investment enables New Focus to redeem existing bonds held by STIC Investments at a price of $40 million. Two years ago, STIC paid $38.2 million for bonds that were due to convert into a 15.64% stake in NFA. The bonds, which were bought by STIC Secondary Fund II and STIC Korea Integrated-Technologies New Growth Engine Private Equity Fund, were due to expire in 2015.

NFA will also use the new investment to expansion through acquisitions and opening new stores. The company reported a net loss of RMB357.8 million ($58 million) in 2012, compared to a profit of RMB60.5 million the previous year, largely due to rising distribution costs and losses arising from post-acquisition valuation markdowns.

NFA provides services to more than six million car owners and thousands of small business owners in China. As of year-end 2012, it had 80 consumer service retailing stores and 18 B2B wholesaling stores.

"NFA is an experienced sector leader in Greater China region and a great platform to consolidate other automobile after-sales service players. We'd like to build a global leading player in this sector," said Zhengyu Wang, managing director at CDH.

CDH will appoint a CIO and seven directors to the board. It expects to complete the transaction in the third quarter this year.

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• Topics
• Greater China
• PIPEs
• Consumer
• China
• CDH Investments Management
• PIPE
• STIC Investments
• Consumer
• Exit