Asia-IO, Redview buy Source Photonics from US GP
Asia-IO Advisors – a PE firm set up by Denis Tse, formerly of Lockheed Martin Investment Management, and Michael Prahl, a professor at business school INSEAD – has teamed up with New Horizon Capital spin-out Redview Capital to buy US communications technology company Source Photonics.
AVCJ understands the deal is worth $300-400 million. The seller is Francisco Partners, which bought Source Photonics in 2010 through a carve-out from MRV Communications. The $146 million investment comprised $113 million in cash and about $33 million in assumed debt.
Asia-IO was set up last year with a view to creating customized co-investment programs to meet the strategic needs of select institutional investors. Its first deal involved a dedicated fund backed by Foxconn Technology Group and SK Holdings, among others. The latest investment is a conventional buyout, with Asia-IO's portion to be warehoused for a new fund.
Source Photonics manufactures optical communication products used in telecommunication systems and data communication networks. Its portfolio includes passive optical networks that help internet providers meet growing bandwidth demand; network transmission devices; power efficient components for wireless networks; and interfaces for data center and cloud-based applications.
The company has over 350 engineers and research scientists based in North America and Asia, as well as more than 3,000 employees at wholly-owned manufacturing facilities in Taiwan and China.
Asia-IO's first investment was also tied to high-tech manufacturing. The firm acquired a Hong Kong-listed shell and - using elements of Foxconn's IT services assets - reconfigured it as a platform on which to build a systems integration specialist focused on introducing cloud computing, big data and artificial intelligence to manufacturing. The business is now known as Maxnerva Technology Services.
Redview is one of two entities that emerged from a restructuring of New Horizon. The firm was set up in 2005 by Winston Wen, son of former Chinese Premier Wen Jiabao, and Jianming Yu. Wen's day-to-day involvement ended in 2012. New Horizon raised three China funds with more than $2 billion in capital, but then split into Redview, which targets growth investments in traditional industries, and technology-focused Advantech. Each unit then raised a $500 million fund.
Francisco is one of the world's largest specialist technology private equity firms with nearly $10 billion in capital raised to date.
Huatai Financial Holdings led the bank syndication for the Source Photonics deal, with CITIC Bank International, Taishin International Bank and China Minsheng Bank jointly underwriting the debt financing. Gunderson and Clifford Chance served as legal counsel. The transaction still requires regulatory approval.
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