KKR makes partial exit from China’s Far East Horizon

The private equity firm sold 195 million shares and was looking to raise around $200 million, according to The Wall Street Journal. The shares were marketed at an indicative price range of HK$7.90-8.15 apiece, representing a 3-6% discount to Monday's closing price of HK$8.40.

In 2009, a KKR-led consortium that included GIC Private and China International Capital Corporation (CICC) paid $160 million for a 30% stake in Far East Horizon. The Shanghai-based company listed in Hong Kong in March 2011 and KKR upped its stake few months after the IPO.

Far East Horizon's shares gained 18% between the start of April and May 4, riding the wave of mainland Chinese capital that has flooded the Hong Kong market. The stock fell about 10% on Tuesday in response to KKR's partial exit.

As a result of the deal, KKR's interest in Far East Horizon has fallen to 12% from 17.89%. GIC made a fully exit from the company in mid-April, securing $65 million in a 60.5 million share sale. State-owned Sinochem is the controlling shareholder with a 27.94% interest. Other investors include Taiwan's Cathay Life Insurance on 9%.

Founded in 1991, Far East Horizon provides financial leasing to Chinese small- and medium enterprises (SMEs) in specialist sectors, such as healthcare and education. Net profit was up 20% year-on-year to RMB2.3 billion ($370 million) in 2014, while revenue grew 28% to RMB10.06 billion over the same period.

With investment opportunities in China's traditional banking and insurance industries limited, PE firms are looking to niche financial services.

In 2008, TPG Capital bought UT Capital Group, which was then known as Nissin Leasing, from Japan's NIS Group. It sold the business to Haitong Holdings for approximately $715 million in 2013, after helping the company expand its activity from the construction sector to SMEs in areas such as healthcare, education, printing and packaging, and machine tools.

Last year, Bain Capital acquired an 80% stake in Lionbridge Financial Leasing for more than $200 million. The company provides lease-back services and leasing asset management to SMEs. 

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• Topics
• Greater China
• Exits
• Financials
• China
• KKR
• Exit
• Financial Services
• Sell down