Go Scale’s China angle wins Philips deal

But a Chinese group, which entered the fray in mid-March, eventually won out, in part thanks to its deep industry connections in China.

The consortium led by Go Scale Capital, which is sponsored by VC firms GSR Ventures and Oak Investment Partners, has agreed to buy an 81.1% stake in the Lumileds unit, with Philips holding on to the remaining 19.9%. The deal values the unit at $3.3 billion.

The takeover will be financed in part from funds managed by Go Scale, which total at least $500 million. Co-investors are putting in the rest. They include Hong Kong real estate and solar investor Kin Ming Cheng's Asia Pacific Resources Development Investment, government-backed Nanchang Industrial Group, and a number of unnamed LPs from GSR and Oak's funds.

Lumileds operates in more than 30 countries and reported $2 billion in sales last year and over $200 million in EBITDA. As part of the transaction, more than 600 patents related to LED manufacturing and automotive lighting will be transferred from Philips to Lumileds.

"It's a sunrise industry," says Sonny Wu, co-founder and managing director of GSR Ventures and chairman of Go Scale. "Our bid overcame fierce competition because we are able to accelerate Lumileds' production capacity in China. The company is actually facing overcapacity in developed countries right now."

China's clean energy industry is worth approximately $3 trillion and is expected to see rapid growth, Wu added. Supported by the Jiangxi provincial government, Go Scale will scale up Lumileds through integration with Chinese companies that are looking for energy efficient solutions. The GP is targeting an ambitious 5x return on its investment within five years, and ultimately plans on exiting via IPO.

China and US-based GSR has already made at least six investments in China's LED space. It previously partnered with Oak in backing LED manufacturer SunSun Lighting and lithium-ion battery maker Boston-Power.

Within the Go Scale acquisition platform, Oak is primarily responsible for generating deal flow. In addition to cleantech, the platform will pursue deals globally in pharmaceuticals, life sciences, materials and consumer goods. The common theme is bringing resources to the China market.

"GSR and Oak have industry expertise in advanced technology such as electric cars, energy-saving batteries and wireless equipment. We bring will bring technology from the US or Europe and help consolidate Chinese industries," says Allan Kwan, venture partner at Oak. "China will become the biggest market for these products, although the firms may also serve international markets."

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• Topics
• Buyouts
• Greater China
• Technology
• buyout
• China
• Technology
• GSR Ventures
• Oak Investment Partners