DCP pursues $5.6b take-private of China's 51job

The private equity firm is willing to buy all outstanding shares for $79.05 apiece, which represents a 16.05% premium to the September 16 closing price, according to a filing. 51job’s stock jumped 16.59% on September 17 in response to the bid, closing at $79.42, a seven-month high.

There has been growing expectation of a wave of privatizations of US-listed Chinese companies because of growing tensions between the two countries – there is legislation pending that could force Chinese businesses to exit US exchanges if they fail to comply with local accounting regulations – and attractive valuations available on the Hong Kong and mainland bourses.

The standout transaction of 2020 to date is the $8.7 billion acquisition of online classifieds marketplace 58.com by Warburg Pincus, General Atlantic, Ocean Link, and the company’s chairman and CEO. Ocean Link initiated the deal and other investors subsequently became involved.

DCP would likely need to bring in co-investors to support the 51job deal. Rick Yan, the company’s CEO, holds a 19.2% stake in the company while Japan’s Recruit Holdings owns 35%. Recruit Holdings – Japan’s largest staffing agency and among the biggest globally – bought a 15% interest in 51job in 2006 and subsequently increased its position. The company has built its business internationally through numerous bolt-on acquisitions.

Established in 1998, 51job describes itself as a leading provider of integrated human resource services in China. The company runs recruitment platforms – 51job.com, yingjiesheng.com, 51jingying.com, lagou.com, and 51mdd.com – and accompanying mobile apps through which job seekers can apply for positions. It also offers value-added services such as business process outsourcing, training, professional assessment, campus recruitment, and executive search.

Two-thirds of 51job’s revenue comes from the recruitment platforms, where employers pay for advertising and marketing services – posting job vacancies and placing banner ads – access to candidate databases and direct communication channels, and recruitment process management tools. Customized private label recruitment websites are also available.

51job.com, which primarily targets white-collar workers aged 20-35, has accumulated 155 million user accounts and 142 million resumes since inception. The other platforms address more specific candidate groups, based on age and skillset. Lagou, for example, focuses on the internet and technology sector. 51job acquired a 60% interest in the business for $119 million in 2017, ultimately paving an exit for several VC investors.

Revenue reached RMB4 billion ($574 million) in 2019, up from RMB3.78 billion the previous year. Net income fell from RMB1.24 billion to RMB526.2 million. The business took a hit due to COVID-19, with revenue falling 13.2% year-on-year in the first quarter and 14% year-on-year in the second quarter.

DCP was established by Liu and Julian Wolhardt, who previously held leadership positions with KKR in China. A debut fund closed at $2.5 billion last year, comprising a US dollar-denominated tranche of $2 billion, plus a renminbi sidecar of $500 million. Recent activity includes a RMB1.94 billion commitment to Tonghua Dongbao Pharmaceutical, a Chinese pharmaceutical company specializing in diabetes treatment.

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• Topics
• Greater China
• Buyouts
• Technology
• China
• DCP Capital Partners
• TMT