Local GP ChinaEquity assumes control of A-share company
ChinaEquity Group, a private equity firm listed on the National Equities Exchange and Quotations (NEEQ), has acquired a controlling interest in an A-share listed company in what could be an attempt to move to the larger exchange.
In April, two major shareholders in Shenzhen-listed Hifuture Electric agreed to transfer 86.7 million shares, or an 11.11% stake, to two subsidiaries held by Chaoyang Wang, ChinaEquity's founder, and his wife Yifei Li. Each share was priced at RMB19, putting the total deal value at RMB1.65 billion ($252 million).
Shenzhen Hifuture said in a filing at the time that the company would undergo a significant asset restructuring once the deal is completed. It may sell, merge, or set up a joint venture with other businesses, with any action likely to involve an asset swap. Local media reported that ChinaEquity intends to inject its private equity business or a portfolio company into the A-share company.
According to the latest filing, ChinaEquity's shareholders have approved the transaction.
Founded in 1999, Shenzhen Hifuture Electric manufactures electrical equipment, including cable distribution boxes, plugs and switches. Revenue came to RMB209 million last year, down from RMB313 million in 2014. The company generated a net profit of RMB26 million in 2015 compared to a loss of RMB91 million in 2014.
ChinaEquity listed on the NEEQ, or the New Third Board, in October of last year. The GP manages about RMB5.4 billion in renminbi assets, including PE and VC funds. It invests in companies from seed to growth stages, targeting the internet, advanced manufacturing, consumer and services, healthcare, cleantech and media industries. Past investments include search giant Baidu, entertainment business Huayi Brothers and healthcare services provider Meinian Onehealth Healthcare.
Another domestic PE firm, JD Capital, listed on NEEQ in mid-2014 and then completed a backdoor listing of its PE business on the Shanghai Stock Exchange last year. This has inspired other GPs to try and follow suit.
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