Unitas snaps up majority stake in Shenzhen ZTE Netview

According to a ZTE filing, the private equity firm has agreed to take an 81% interest in ZNV, pending regulatory approval. Of this, 65% comes from ZTE directly, at a cost of RMB1 billion, with the remainder acquired from ZTE HK, a wholly-owned subsidiary.

ZTE HK will retain 9% of the business, while Shenzhen Qunxian Technology, a vehicle controlled by ZNV's management, will continue to own a 10% stake.

The company has two primary business lines: providing systems that monitor telecommunications radio base stations and internet data centers; and developing end-to-end video surveillance systems, including design, camera hardware, DVR units and associated software. Net profit for the nine months to September came to RMB110.6 million, compared to RMB139.7 million for 2011 as a whole.

ZNV's major customers are the Chinese state-owned telecom operators. ZTE was already a major supplier of telecom infrastructure equipment and the operators required mechanisms to gauge the temperature, humidity and power usage of base stations. It was a logical extension of ZTE's business.

The video surveillance unit had similar origins: the telecom operators participate in many municipal CCTV projects and they were looking for a systems supplier.

ZTE approached several domestic and foreign private equity investors regarding the sale. Unitas is thought to have won out because ZNV is a good fit with its investment strategy - the private equity firm made inquiries about the asset in 2010 but ZTE didn't want to sell - and because it was able to move fast. An agreement was reached in just one month.

"For a control transaction anywhere in the world that is fast," said John Lewis, Unitas' chief investment officer. "We were well served by the fact that we were able to bring relevant knowledge of China and relevant industrial and operational expertise. We had a team of eight people who were able to move very quickly on the deal."

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• Topics
• Buyouts
• Greater China
• Technology
• China
• TMT
• buyout
• Unitas Capital