Bain denies talk of potential Gome exit

Jonathan Zhu, a managing director at Bain, told Dow Jones Newswires that no one has approached the private equity firm regarding a potential sale. Dazhong Zhang, chairman of Gome, said in a separate interview that he had not heard anything of Bain planning to sell down or raise its stake.

Zhang, who founded Beijing Dazhong Electrical Appliances which was bought by Gome in 2007 for RMB3.6 billion ($564 million), was brought in as chairman in March following the resignation of his predecessor, Xiao Chen.

Chen was involved in a long-running power struggle with Guangyu Huang, Gome's founder and major shareholder, who is currently serving a 14-year prison sentence for bribery and other illegal business practices. Zhang is seen to have a strong relationship with Huang, and he is expected to bring stability to the management team.

Earlier this week, Gome, announced that net profit rose over 30% year-on-year to RMB1.25 billion in the first half of 2011, with revenue also increasing 20% to RMB29.8 million. The company attributed the strong performance to the launch of 131 new outlets in second-tier cities. It wants to add 260 stores by the end of the year. Gome currently has 938 outlets, up from 826 a year ago. A further 494 stores are held by Huang - but operating under the Gome name - are likely to be sold to Gome, pending Ministry of Commerce approval.

Suning Appliance is China's largest electrical appliance retailer with around 1,451 stores as of June 30.

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• Topics
• Consumer
• Greater China
• Bain Capital Asia