CCB International sees 4x exit with China ITS

China ITS is a transportation infrastructure technology solutions and services provider, focusing on turnkey solutions for road and rail operations in China, and claiming the number one position in market share in the sector.

“The company itself is actually leveraging on China’s infrastructure play,” Song Yi, Investment Director for Direct Investments at CCB International, told AVCJ. “The company does intelligent transport systems – which covers railways and toll roads. We saw the opportunity in the infrastructure business, and this is why we invested in the end of 2006.”

CCB International initially invested $14 million in the company in November 2006 for around a 13% stake (subsequently pared down to 5.2% after a partial divestment to Merrill Lynch in late 2007). It further infused RMB200 million ($29.5 million) into the investee in December 2008 to support a pre-IPO management share buyback.

During the period of its investment, CCB International supported China ITS by linking it up with the group’s commercial bank, Song explained, as well as financial and operational advice. “During the global financial crisis, we continued to back the management and to be their strategic partner,” he added. “When one of the IPO investors redeemed their shares, we actually supported the management because we have confidence in them, and supported them for the shareholder buyback.” CCB International had board seats with special majority consent rights on certain decisions. Other follow-on investors into China ITS were investors included Baring Private Equity Asia, CMS Capital, Investor AB, Temasek Holdings, GE Capital, Intel Capital, Mizuho and NWS Holdings.

China ITS achieved net proceeds of roughly HK$600 million ($77.2 million), with substantial oversubscription. CCB International also acted as sponsor for the listing, along with Bank of America Merrill Lynch and Macquarie.

China ITS debuted mid-July, seeing a limited rise on its initial offer price. However, the listing saw strong retail support, with its retail portion covered 28.3x by margin financing orders of up to HK$2.6 billion ($334 million).

Despite the relatively limited upside in the IPO, Song said, “We’re very happy with this performance,” citing CCB International’s relatively low entry price. CCB International, he added, saw some 50% IRR on the IPO exit. 

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• Topics
• Industrials
• Greater China
• CCB International Asset Management
• Baring Private Equity Asia
• Temasek Holdings
• Intel Capital