Ocean Link joins consortium pursuing 51job take-private

The private equity firm submitted an offer of $79.05 per American Depository Share (ADS) – valuing 51job at $5.6 billion – in September 2020. The price, which represents a 16.05% premium to the September 16 closing price, is unchanged. The consortium holds 17.62% of the voting power in 51job, chiefly through CEO Rick Yan’s equity interest.

The largest shareholder is Japan’s Recruit Holdings with 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.

51job’s stock jumped 6.86% in response to the updated acquisition proposal to close at $68.19 on May 4. It reached as high as $80.50 in the days following the submission of DCP’s initial offer, but subsequently fell back.

DCP was established by David Liu and Julian Wolhardt, who previously held leadership positions with KKR in China. A debut fund closed at $2.5 billion in 2019. Ocean Link, which targets China travel, tourism and consumer technology assets, closed its second US dollar-denominated fund in February at $580 million.

Ocean Link initiated the $8.7 billion take-private of classifieds marketplace 58.com last year, the second-largest such deal ever completed. While there have been expectations of more privatization activity involving US-listed Chinese companies – especially given the threat posed to the listed status of Chinese companies by US accounting compliance regulations – not much has materialized.

A group of private equity investors recently completed a $4.6 billion take-private of China Biologic Products Holdings. Meanwhile, numerous companies have opted for additional listings in Hong Kong, which gives them the option of exiting the US exchanges at a later date.

Established in 1998, 51job 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.

51job.com, which primarily targets white-collar workers aged 20-35, has accumulated 171 million user accounts and 154 million resumes since inception. The other platforms address more specific candidate groups, based on age and skill set. Lagou, for example, focuses on the internet and technology sector.

The company posted RMB3.68 billion ($565.3 million) in revenue for 2020, down from RMB4 billion the previous year, largely due to COVID-19 hampering customer demand. Net income rose from RMB6.1 million to RMB25.8 million.

Most 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.

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