CITIC PE, Beijing Enterprises Water to buy majority stake in Jin Cai

The entire deal is worth HK$3.7 billion ($477 million) and will see the buyers take a 77% stake in Jin Cai. They will apply for a whitewash waiver in order to avoid triggering a mandatory general offer for all outstanding shares, as is required under Hong Kong's Takeovers Code, according to a regulatory filing.

Two funds managed by CITIC Private Equity - its most recent renminbi- and US dollar-denominated vehicles - will each buy 226 million ordinary shares at HK$0.79 apiece for a total consideration of HK$178.6 million. They will also acquire HK$1.4 million apiece in preference shares issued by Jin Cai. Beijing Enterprises Water will subscribe to HK$416.7 million and HK$3.34 million in ordinary and preference shares, respectively.

The remainder of the transaction comprises only preference shares and is divided into four tranches to be completed over a period of two years. The two CITIC PE funds will each invest an additional HK$420 million, taking their individual equity ownership to 14.98% upon conversion. Beijing Enterprises Water will contribute HK$980 million and end up with 34.95% upon conversion.

In parallel to these investments, a company owned by four individuals described as experienced in business management will get HK$342.9 million in ordinary shares and HK$809.5 million in preference shares for a post-conversion stake of 30.5%. The vast majority of these shares will be acquired from a selection of existing investors, including Reorient Special Situations Partners, Strait Capital Management and Wenze International Investment.

Jin Cai claims to be the second-largest cigarette package supplier in China with a 17.7% market share in 2012. Its clients include leading domestic brands such as Hongtashan and Jinsheng. Revenue came to RMB171.8 million ($27.5 million) in 2013, down from RMB183.3 million the previous year, while net profit fell to RMB21.2 million from RMB35.6 million.

The company is moving into solar power, with plans to develop 25 grid-connected plants with aggregate installed capacity of 1.5 gigawatts by 2017, plus distributed plants with installed capacity of 200 megawatts.

Beijing Enterprises Water, which is controlled by Beijing Enterprises Holdings, is involved in water treatment and the construction and servicing of related infrastructure.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Buyouts
• PIPEs
• Cleantech
• Industrials
• Greater China
• China
• manufacturing
• Cleantech
• buyout
• Citic Private Equity
• PIPE