PAG set for $1.4b privatization of Yingde Gases

The PE firm agreed in late February to acquire a 42.1% interest for HK$4.7 billion from Yingde’s chairman, Xiangti Zhao, and two founders, Zhongguo Sun and Trevor Strutt. The deal was contingent on PAG acquiring more than 50% of Yingde and it duly offered to buy outstanding shares for HK$6 apiece. This bettered a bid of HK$5.50 per share made in January by US-based industrial gas player Air Products.

As of April 20, the PAG offer had received support from investors representing 90.9% of the shares, and the acceptance window was extended to May 4. It closed with PAG holding sale commitments that translate into a 98.11% stake in Yingde, according to a filing.

PAG’s opportunity arose as a result of a boardroom dispute last November that saw Sun and Strutt ousted as CEO and COO, respectively, and Zhao appointed chairman. Shareholders voted in March to remove Zhao and reinstate Sun and Strutt. However, the pair stepped down in April as Zhongwei Qiu, a managing director at PAG, assumed the role of chairman and CEO.

Yingde is China’s largest on-site gas supplier, primarily serving the metals, chemicals, electronics and energy production industries. It is also involved in retail gas distribution and specialized production of industrial gases. As of year-end 2016, the company had 70 facilities in operation and 13 more under development, with a total installed oxygen capacity of 2 million normal cubic meters per hour.

Revenue came to RMB8.4 billion ($1.2 billion) in 2016, up from RMB7.9 billion the previous year, but heavy impairment losses on plants and equipment saw a RMB532.7 million net profit in 2015 turn into a RMB148.2 million loss in 2016.

PAG Asia Capital is the private equity arm of PAG, an alternative asset manager with $16 billion in capital under management. The PE unit closed its second pan-Asian fund at $3.7 billion at the end of 2015.

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• Topics
• Greater China
• Industrials
• Buyouts
• China
• PAG
• energy
• Commodities