Go Scale sets up PE exit of China's Lattice Power

Go Scale is an investment platform sponsored by GSR Ventures and Oak Investment Partners. Last month, it participated in the acquisition of a majority stake in Lumileds, the LED components and automotive lighting unit of Dutch electronics giant Philips, for $3.3 billion.

Lattice is an LED chip maker and a longstanding portfolio company of GSR. Sonny Wu, managing director of GSR and executive chairman of Lattice, is also chairman of Go Scale.

The Lattice acquisition was announced in March and has now been confirmed by the Hong Kong Stock Exchange. According to a regulatory filing, SFCE has taken a 59% interest in Lattice. The sellers will be issued 392.3 million new shares in SFCE at HK$5.20 apiece. This represents approximately 11.29% of the company's issued share capital.

The deal comprises two tranches. Shares accounting for a 42% stake in Lattice will be purchased from a number of shareholders - including Go Scale, Asia Pacific Resources Development (APRD), Crescent Point, GSR, Temasek Holdings and Mayfield - for HK$1.44 billion. The remaining HK$593.5 million will go to participants in Lattice's employee share ownership program.

Exchanging their Lattice holdings for shares in listed SFCE represents a liquidity event for the company's PE and VC backers. Go Scale said in a statement that it had secured a 10x return - on paper only - on an investment made less than five months ago.

Lattice is the first company in the world to start mass production of LED chips using gallium nitride (GaN) on silicon technology, which is said to be 30% more cost efficient than the traditional sapphire or silicon carbide components. Lattice generated $59.4 million in revenue in 2014, up from $34.8 million the previous year. Its net losses widened to $29.3 million from $12.7 million.

"Lattice Power's breakthrough technology represents the next generation of affordable and sustainable clean electricity. When merged with SFCE's integrated clean energy solutions, the combination empowers the companies to pursue further growth and scale through the GO Scale model," Wu said in a statement.

GSR, Mayfield and AsiaVest Partners first backed the company in 2006. Subsequent rounds in 2007 and 2010 saw the arrival of KPCB, Temasek, International Finance Corporation, Crescent HydePark and AJIA Partners. Last year, APRD led a Series D round worth $80 million that also featured GSR, Mayfield and Crescent. APRD's individual contribution was $40.8 million.

Controlled by Cheng Kin Ming, a Chinese billionaire with a strong interest in renewable energy, APRD owned 28.49% of Lattice prior to SFCE's investment and now has 16.38%. APRD is also a shareholder in SFCE and, subsequent to the issue of new shares to Lattice investors, holds a 20.64% interest in the company.

APRD's other portfolio companies include: Suntech Power, a solar panel manufacturer that filed for bankruptcy in 2013 and was bailed out by local government-led consortium; and Boston-Power, a US lithium-ion battery maker that used capital from GSR, Oak and others to boost its presence in China.

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• Topics
• Exits
• Greater China
• Cleantech
• Technology
• GSR Ventures
• Oak Investment Partners
• China
• Cleantech
• Exit
• Crescent Point
• Temasek Holdings
• Mayfield