Focus Media targets $1b Hong Kong IPO - report

According to IFR Asia, the offering could even come before the end of 2014. Focus Media would be the first of the US-listed Chinese companies that have been privatized with the support of PE firms since mid-2011 to return to the public market.

Hong Kong is seen as the logical destination for these companies, which tired of US regulatory burdens and a perceived undervaluation by investors as a result of accounting scandals in a number of Chinese firms. Focus Media was among those that saw its stock fall under the weight of accusations of fraud by short-seller Muddy Waters. The company denied allegations of that it overstated its assets and overpaid for acquisitions.

Focus Media's CEO Jason Jiang, The Carlyle Group, FoutainVest Partners, CITIC Capital Partners, CDH Investments and China Everbright submitted a bid in August 2012 that valued the company at $3.5 billion. The board accepted a $3.7 billion offer that December, by which point CDH had dropped out and existing investor Fosun International had agreed to roll over its stake into the transaction.

The consortium secured $1.5 billion in aggregate debt financing for the buyout - which was completed in May 2013 - and reportedly completed a $500 million dividend recap last September.

Founded in 2003, Focus Media operates an advertising network in various Chinese urban locations. The company uses audiovisual television displays that are placed primarily in high-traffic areas of commercial office buildings such as in lobbies and near elevators, as well as in large retail chain stores and other venues.

The company posted revenues of $927.5 million in 2012, up 17.9% year-on-year, as net income rose 46.7% to $235.9 million. It is said to have generated EBITDA of $480 million in 2013.

Private equity firms have supported 12 successful management buyouts of US-listed Chinese companies since August 2011. At least 15 more deals are in process.

While Focus Media would be the first of this batch to re-list in Hong Kong, Morgan Stanley Private Equity Asia privatized Singapore-listed Sihuan Pharmaceutical Holdings in 2009 and then took it public in Hong Kong the following year. It completed a partial exit in September 2013.

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• Topics
• Exits
• Greater China
• Media
• Hong Kong (China)
• IPO
• Exit
• The Carlyle Group
• TMT
• Fountainvest Partners
• CITIC Capital Partners
• China Everbright