CITIC Capital finally bags AsiaInfo take-private

AsiaInfo-Linkage has now joined this select group. A consortium led by CITIC Capital Partners completed a deal that values the telecom software provider at approximately $887 million almost two years to the day after the initial bid was tabled. To put that in perspective, six months passed in between Funtalk disclosing its take-private offer and the company de-listing. Focus Media, in which CITIC Capital also participated, was done in less than 10 months.

However, in both cases management acted in partnership with PE from the outset. CITIC Capital's approach to Asia-Info was unsolicited.
"With Focus Media deal we had discussions with the management team before we launched the bid because they were part of it," says Brian Doyle, managing partner at CITIC Capital. "The AsiaInfo process took longer because our offer was unsolicited and then they ran a full process and considered lots of different potential buyers." He adds that the regulatory review for investment in the telecom-related assets is also more stringent than for other sectors.

In the months before CITIC Capital's bid won board approval in May 2013, a string of PE firms were linked to AsiaInfo. The buyer consortium also took shape, with the addition of CITIC Private Equity and China Broadband Capital (CBC), as well as three of CITIC Capital's LPs - AlpInvest Partners, Qatar Investment Authority and Temasek Holdings.

The new equity commitment from these investors is approximately $415 million, while existing shareholders - including Edward Tian, CEO of CBC and co-founder of AsiaInfo - are rolling over equity valued at $134 million. The balance is debt financing provided by Nomura International, Bank of Taiwan, Cathay United Bank, ICBC International Capital and Maybank.

Doyle says the equity portion of the deal is relatively high because the consortium wants to use cash flows to grow the business. He estimates China's telecom software market is growing at around 15% per year, driven by increased users and more complex usage. The rollout of the country's 4G network will accelerate this transition.

China Mobile, China Unicom and China Telecom accounted for the bulk of AsiaInfo's $547.9 million in revenue in 2012. As they develop an ever wider range of products, there will be more call for AsiaInfo's services. "It's not just more complexity around billing," Doyle adds.

"You are also getting into data analytics, working with the carriers to understand traffic and usage patterns and provide better products. It is a huge growth area."

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• Topics
• Technology
• Greater China
• Buyouts
• CITIC Capital
• buyout
• Technology
• China