State bank funding to help major Chinese firms go private

  • Penang hotels full, florists overrun with orders for Karpal
    Penang hotels full, florists overrun with orders for Karpal

    GEORGE TOWN, April 20 — Some hotels here are reporting full occupancy as people flock to pay their last respects to the Tiger of Jelutong, Karpal Singh. Waterfall Hotel receptionist T. Kalpana,... …

  • Despite Karpal’s death, Anwar has five days left for sodomy appeal in apex court
    Despite Karpal’s death, Anwar has five days left for sodomy appeal in apex court

    The late Karpal Singh's funeral is today but his most famous client, Datuk Seri Anwar Ibrahim, has a more pressing matter at hand - to meet a deadline this Friday to appeal against his sodomy conviction by the Court of Appeal. The petition has to be filed in the Federal Court by April 25. Karpal, 73, died in a road accident on the... …

  • Karpal’s ‘angel’ Michael heads home to India
    Karpal’s ‘angel’ Michael heads home to India

    IPOH, April 20 —  ”Michael was nothing short of an angel”.  That is the poignant description given by Sangeet Kaur Deo about Michael Cornelius, the assistant to Karpal Singh. “From the day... …

  • In hour of grief, helping hands keep Karpal’s flame burning
    In hour of grief, helping hands keep Karpal’s flame burning

    GEORGE TOWN , April 20 — Since news first broke of Karpal Singh’s sudden death Thursday, a steady stream of volunteers have been turning up at the late Penang-born’s home at 144A, Jalan Utama here.... …

  • Umno MP admits to Facebook photos of Karpal in death
    Umno MP admits to Facebook photos of Karpal in death

    KUALA LUMPUR, April 19 — Under-fire Umno lawmaker Datuk Nawawi Ahmad admitted today to uploading photos of slain DAP leader, Karpal Singh on the Internet using his smartphone. The Langkawi MP... …

  • We love you, Tiger of Jelutong, grandchildren bid Karpal farewell
    We love you, Tiger of Jelutong, grandchildren bid Karpal farewell

    The late Bukit Gelugor MP Karpal Singh was given a moving tribute and farewell by his grandchildren tonight, who vowed to take up the mantle of Tiger of Jelutong. The 11 grandchildren, aged between 1½ years and 11, showed the media a poster which they had made together. "Singh is King. We love you, Tiger of Jelutong. We will miss you. Jangan... …

New York (China Daily/ANN) - While Chinese stocks struggle to attract US investors, private-equity groups are seeking to buy out some of these companies with funding provided by State-owned China Development Bank.

Frustrated by their low valuations, recently delisted Harbin Electric Inc and Nasdaq-listed Fushi Copperweld Inc have turned to Abax Global Capital, a Hong Kong-based asset manager partly-owned by Morgan Stanley, in an attempt to go private.

Shares of US-listed Chinese companies have been hit hard by accounting scandals fueled, at least in part, by short sellers such as Muddy Waters LLC over the past two years.

While most Chinese companies haven't been accused of wrongdoing, the value of Chinese stocks has plummeted on the US stock market. The 180 Chinese companies that have issued securities on foreign exchanges since the start of 2010 are trading on average 21 percent below their offer prices, according to data compiled by Bloomberg News. The 82-stock Bloomberg Chinese Reverse Mergers Index has lost an aggregate 25 percent since August 2011.

There are 129 US-listed Chinese companies trading at an average of eight times their estimated 2012 earnings per share, compared with a ratio of 11 times EPS for 276 Chinese companies that trade on the Hong Kong exchange, according to data compiled by Citigroup Inc.

"If you can distinguish between a good company and a company that has issues, you can do very well investing in China," said Kevin Pollack, a fund manager at Paragon Capital LP in New York.

Abax, which manages $900 million in assets, started a $300 million fund this year to invest in US-listed Chinese companies.

In November 2011, Harbin Electric, a maker of electric motors in northeastern China and listed on Nasdaq, went private in a buyout by Abax and Yang Tianfu, Harbin's CEO, that was financed with a $400 million loan from the Hong Kong branch of China Development Bank, or CDB.

Yang and Abax each owned about 41 percent of the company's outstanding shares before the deal; the split now is Yang, 75 percent stake, and Abax, 25 percent.

On June 28, Abax said it had reached a deal to take over Fushi Copperweld, a Dalian-based manufacturer of copper wire and related products, along with the company's CEO, Li Fu.

The $9.50-a-share offer, which Fushi's board of directors approved, represents a premium of 21 percent above the stock's closing price on the day the deal was announced.

Although lower than Abax's initial bid of $11.50 a share in 2010, the offer was higher than one for $9.25 submitted last November.

The deal is valued at $363.8 million based on Fushi's shares outstanding as of May 4.

Fu, Abax and their affiliates, who own about 30 percent of the stock, will buy out the company with their own equity and debt financing from CDB in Hong Kong.

Fushi said its decision to go private was based on "the determination that this transaction appropriately recognizes the value of [our] business" and provides shareholders "an immediate and substantial cash premium for their investment".

Typically, such a deal requires approval from shareholders and the US Securities and Exchange Commission. A Fushi representative told China Daily in an e-mail that the deal is expected to be approved in the fourth quarter of 2012.

CDB is the biggest Chinese lender helping US-listed Chinese companies to go private. The bank has provided $1.085 billion toward such delisting transactions, more than China Citic Bank Corp's $25 million, the second-biggest outlay, according to data from Roth Capital Partners, an investment bank that specializes in emerging markets.

In June, China TransInfo Technology Corp, which makes geographic transportation-information software for the Chinese government, agreed to be taken private by its CEO, Xia Shudong, in a deal that values the company at $146.6 million.

The acquisition was funded with a loan from CDB.

The bank also played a big role in the privatization of China Security & Surveillance Technology in September 2011, before Harbin's financial buyout.

Some critics have speculated that CDB's financing has to do with Beijing's disagreement with Washington over cross-border regulation of accounting firms.

But a person close to the matter, who asked not to be identified by name, said it's a "pure commercial decision".

"CDB has its own criteria about loans made to any company. It may continue to finance deals going private if it sees fit," the person said.

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • Langkawi MP unrepentant, continues insults on late Karpal, says Facebook user The Malaysian Insider
    Langkawi MP unrepentant, continues insults on late Karpal, says Facebook user

    A Barisan Nasional MP whose Facebook posting poking fun at the death of Karpal Singh shocked Malaysians has again insulted the late DAP leader, this time comparing him to a hostile figure in Islamic history who fought against Prophet Muhammad. Facebook user Shamsul Kamal Ariffin Mohd Nasir, 42, told The Malaysian Insider that Langkawi MP,... …

  • Karpal’s car crashed into lorry, not the other way around, says Perak police The Malaysian Insider
    Karpal’s car crashed into lorry, not the other way around, says Perak police

    Initial investigations have revealed that Karpal Singh’s Toyota Alphard crashed into a five-ton lorry in the accident yesterday that claimed his life and that of his assistant, Perak police said today. State police chief Datuk Acryl Sani Abdullah Sani also dismissed rumours and speculation that the accident was caused by the lorry crashing... …

  • Interfaith group ‘worried’ that ex-judge can have such ‘racist’ views The Malay Mail Online
    Interfaith group ‘worried’ that ex-judge can have such ‘racist’ views

    KUALA LUMPUR, April 19 — An interfaith group expressed shock today at the “racist” views of a former high-ranking judge who had called the presence of large Hindu and Buddhist statues in the... …