CVC, CDPQ carve out China ad agency's global portfolio

BlueFocus, which has operations spanning advertising, public relations, digital marketing, and communications, said in a filing last month that it would sell a 60% stake in the holding company for its three main international agency groups, We Are Social, Fuseproject, and Vision7 International. It will retain a 40% interest.

The portfolio includes: We Are Social, an advertising agency with offices across North America, Europe, and Asia; Fuseproject, a boutique design firm in San Francisco; Citizen Relations, a PR agency primarily focused on North America; Cossette, a marketing and communications agency in Canada; The Camps Collective, a digital advertising agency in North America; Vision7 Media, a Canadian media planning and buying group; and Metta, an advertising agency in Hong Kong.

The new entity will have more than 2,500 employees across 12 countries. The goal is to create a digital-first, technology-enabled global advertising and marketing services group, with CVC and CDPQ providing capital and strategic support to enable geographic expansion, recruitment, and the development of new technology and data capabilities.

"CVC is impressed by the opportunity for accelerated growth," said Scott Chen, a managing director with the private equity firm, in a statement. "We couldn’t pass up the unique opportunity to invest in this group of leading, tech-enabled agencies and we look forward to working with their talented management teams to take each of the businesses to the next level."

BlueFocus was established in 1996 and listed in Shenzhen in 2010. The company has expanded its operational capabilities and geographic footprint through numerous acquisitions, first entering overseas markets in 2013. BlueFocus International is now headquartered in Silicon Valley.

However, the M&A spree has led to the accumulation of significant goodwill, where the purchase price exceeds the fair value of the assets acquired and liabilities assumed. As of year-end 2020, BlueFocus’ goodwill stood at RMB5.11 billion ($789 million), of which RMB294.2 million had been written off as impaired. Selling the international agencies will shave off another RMB1.8 billion, bringing goodwill as a portion of net assets below 35%.

BlueFocus posted RMB40.5 billion in operating income for 2020, up 44.2% year-on-year. Net profit rose 29.8% to RMB588.7 million. Vision7 International – the major overseas subsidiary, which includes Cossette, Vision7 Media, Citizen Relations, and The Camps Collective – generated RMB1.78 billion in operating income and RMB111.4 million in net profit.

CVC is currently deploying its fifth Asia fund, which closed at $4.5 billion in 2020. It typically invests in businesses with enterprise values of $250 million to $1.5 billion. CDPQ had $365.5 billion ($298 billion) in assets as of December 2020, of which C$64.3 billion was in private equity. The Canadian pension fund opened its first Asia office in 2014 and has become increasingly active as a direct investor. It has C$48 billion deployed in the region across all asset classes.

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• Topics
• Greater China
• Media
• Buyouts
• China
• CVC Capital Partners
• Caisse de depot et placement du Quebec (CDPQ)