Go Scale still committed to global deals, despite Lumileds setback

"We will continue to pursue deals in this industry, we are looking to invest up to to $10 billion in this space," Sonny Wu, chairman of Go Scale, told AVCJ. "We are looking at everything, not just LED but also areas such as electric vehicles and clean energy." Asking if he would still look at US acquisitions, Wu added, "Why not?"

Go Scale, which is sponsored by VC firms GSR Ventures and Oak Investment Partners, agreed to buy an 81.1% stake in the Lumileds unit in April, with Philips holding on to the remaining 18.9%. The deal valued the business at $3.3 billion.

The acquisition was to have been financed in part from funds managed by Go Scale, which total at least $500 million. The remaining equity would have come from co-investors, including Hong Kong real estate and solar investor Kin Ming Cheng's Asia Pacific Resources Development Investment (APRD), government-backed Nanchang Industrial Group, and a number of unnamed LPs from GSR and Oak's funds.

Philips said in October that completion was uncertain because the Committee on Foreign Investment in the United States (CFIUS) - which reviews the national security implications of foreign investments in companies with US operations - had "expressed unforeseen concerns." Go Scale said in a statement that both parties repeatedly made their case "under the principles of openness and fairness," but failed to address government concerns that have yet to be fully explained.

"During the process, Go Scale Capital was very transparent about its bona fide commercial and market-oriented interests to invest in technologies and apply them towards global sustainable development to generate attractive investment returns," the firm added.

Philips now plans to engage with other groups that had expressed an interest in Lumileds. Go Scale overcame competition from several global buyout firms to secure the deal.

Wu described it at the time as one step towards creating a global LED company - and despite the transaction collapsing, he remains committed to this goal. Go Scale reiterated its vision of combining world-leading technologies with China's "powerful market engines." In the case of Lumileds, Go Scale claims it prevailed because of its ability to accelerate the business' production capacity in China.

Lumileds operates in more than 30 countries and reported $2 billion in sales in 2014 and over $200 million in EBITDA. As part of the eventual divestment, more than 600 patents related to LED manufacturing and automotive lighting will be transferred from Philips to Lumileds.

In July, Go Scale raised $1 billion for its cross-border buyout fund, which it hopes will translate into $5 billion worth of dry powder once debt financing and co-investment are factored in. Cheng is an investor in the fund and Good Resources - a listed affiliate of APRD - will offer support on all M&A deals, as well as co-investing in certain transactions.

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• Topics
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