MSPEA exits Sino Gas stake to investment partner

Hong Kong-listed Zhongyu said in a regulatory filing that it would pay MSPEA $78.7 million for the stake, more than double the private equity firm's equity commitment to the privatization. As a result, Zhongyu's interest in Sino Gas will increase to 88.7%, with Yuchuan Liu, the company's chairman and CEO, holding the remainder.

Sino Gas is owner and operator of a natural gas distribution network that served approximately 406,756 residential, 43 industrial and 882 commercial customers as of June 2015. This network comprises 22 projects - 15 of which are in Hebei province - and 2,824 kilometers of pipeline, plus a fleet of delivery trucks. The company posted a net loss of RMB37.5 million ($5.8 million) in 2014.

MSPEA and Liu submitted a take-private offer worth $0.50 per share in December 2013 and the board accepted a bid of A$1.30 per share - valuing the entire company at around $74.9 million - in April 2014. By that point Zhongyu had joined the consortium. MSPEA and Zhongyu made equity contributions of $28.96 million and $37.45 million, respectively, with Liu putting in rollover equity.

When the take-private was agreed Sino Gas' business was smaller, with 2,039 km of pipeline and just under 300,000 residential customers. The company posted revenue of $50.4 million in 2012 and net income of $6.4 million.

Zhongyu operates 52 projects in mainland China, supply more than one billion cubic meters of gas every year through 7,800 km of pipeline to 980,000 residential and more than 4,000 industrial and commercial users. It posted turnover of HK$3.4 billion ($437 million) and net profit of HK$324.3 million in 2014.

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• Topics
• Exits
• Industrials
• Greater China
• Morgan Stanley Private Equity Asia
• Trade sale
• energy
• Exit
• China