Hunan TV & Broadcast backs Qihoo360 take-private project fund

The vehicle, named Huarong 360 Special Investment Fund, was launched by Chinese broker Huarong Securities. It will help finance the take-private transaction and ultimately re-list Qihoo on the A-share market.

In June, Qihoo's chairman and CEO, plus CITIC Securities, China Renaissance Holdings and Sequoia Capital submitted a privatization bid that valued the company at $9.9 billion. Qihoo completed a $200 million share repurchase program in February and won board and shareholder approval to repurchase another $200 million worth of shares in March.

In August, Qihoo announced that it intended to buy a majority stake in Hong Kong-listed Vision Values, which triggered speculation that the company may seek to re-list in Hong Kong via a reverse merger. The People's Insurance Company of China (PICC) and its subsidiary PICC Property and Casualty (P&C) were co-investors in the deal.

The Huarong 360 Special Investment Fund has a life of five years. Investors can exit in the secondary market once Qihoo completes its domestic listing, a filing suggested. According to the agreement, Hunan TV will also provide bridge financing of no more than RMB$61 million.

Founded in 2005, Qihoo was the leading provider of PC internet security and mobile internet security products in China last year, with 479 million monthly active users and 744 million smart phone users. It was also the number one PC browser provider and Android mobile app store operator.

Qihoo generated revenues of $1.39 billion in 2014 - primarily from online advertising, value-added services and enterprise and IT systems services - compared to $671.1 million the previous year. Net income rose from $99.7 million to $222.8 million over the same period.

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