Hisense unit makes two for Advantage in China

Advantage purchased a significant minority stake in the manufacturer of broadband multimedia consumer electronics via a private placement. HBMT is a division of Hisense Group, one of China's largest electronic appliance corporations.

This investment comes more than a year after the private equity firm took a 14% stake in Hong Kong- listed media and advertising firm Qin Jia Yuan Media Service (QJY). Advantage said at the time that it had been in talks with QJY for almost two years, as the company was not looking at strategic investors, but its persistence paid off.

Advantage's pursuit for HBMT was a different prospect because the company was actively seeking overseas investors. "The company is very interested in selling its products in Japan," says Emmett Thomas, the private equity firm's head of Asia tells AVCJ. "We also seek technologies in Japan that can be used in China."

In addition to increasing HBMT's sales in Japan, Advantage will advise the company on its M&A strategy.

HBMT launched in 2003 as a unit of Hisense Electric Company (HEC), which produces flat panel television receivers. Its parent owns two listed companies: HEC, which trades in Shanghai, and Hisense Kelon Electrical Holdings, which trades in Shenzhen and Hong Kong. It claimed 2010 sales revenue of $9.5 billion and overseas sales revenue of $1.4 billion, up 13.85% and 39% year-on-year.

Given its sales strength, Thomas says HBMT does not plan to raise further capital in near future, nor will Advantage seek a larger stake size.

While Advantage may be a new player in China, it has closed other overseas deals in recent years, notably in the US where it purchased TeleGuam Holdings in 2011 and GST AutoLether in 2008. When the firm first acquired GST - and became less active locally - industry peers wondered if Advantage would remain a Japanese investment firm. The firm said then, as it does now, that it will continue pursuing domestic targets as well as those overseas that have Japanese business angles or can bring synergies to its local investees.

And when it comes to investing in Chinese companies, Advantage does its homework. Despite making its first investment in a Greater China company one year ago, the firm set up a Hong Kong office more than five years ago to observe Chinese companies seeking expansion opportunities in Japan.

This approach aims to circumvent the issue facing other Japanese firms in expanding their overseas portfolios.

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• Topics
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• Advantage Partners