PrivateEquityChina

Qio Xing $13m Private Placement

One of China's largest makers and distributors of telecommunications products, Qiao Xing Universal Telephone Inc, placed 2 million shares of stock at $6.50 per share to a private investor.

The investor will receive four-year warrant to purchase up to 400,000 shares of common stock at $8.125 per share. Worldwide Gateway Co. Ltd. acted as placement agent for the transaction.

January 2006

Starbucks vs Xingbake

Shanghai Xingbake Cafe Corp has appealed a court order to change its name and pay 500,000 yuan (US$62,000) in damages, claiming Starbucks is just a bully.  Starbucks will defend the appeal.

Starbucks opened in China in 1999 after Xingbake had successfully registered its Chinese name.
Xing is star. Bake is pronounced "bah kuh".

Using the same Chinese name as Starbucks and imitating the Starbucks cafe design was considered "illegitimate competition" according to the ruling of Shanghai's No. 2 Intermediate People's Court.

Xingbake does not use Starbucks as its English name. Amusingly Xingbake has no plans to sue Starbucks for using the same Chinese name!

The high profile Starbucks trademark dispute is being closely watched as an indicator of the progress being made by China to protect intellectual property rights.

A Starbucks coffee in any of their 40 stores in Shanghai costs more than an average Chinese worker makes in a day.

January 2006

Henan Shineway - China Meat Producer

Chinese meat producer Henan Shineway put itself up for sale in a deal that could value the state-controlled group at about US$800 million, the Financial Times reports.

The deal attracted interest from private equity groups including JPMorgan Partners, American International Group Inc. (AIG), and Singapore's Temasek Holdings (TEMAH.YY), the paper says.

Henan Shineway, AIG, and JPMorgan Partners declined to comment and Temasek was unavailable for comment, the paper says.

The paper cites people close to the situation as saying Henan Shineway, which controls domestically listed Henan Shuanghui Investment & Development Co. (000895.SZ), held preliminary talks with potential bidders, but no deal has been signed and the process could still collapse.

People close to the situation said the sale of Henan Shineway could be complicated by the ownership structure of Henan Shuanghui, which has a market capitalization of more than CNY7 billion, the paper says, without elaborating.

US$150m for China Greentown - Private Real Estate Developer

JP Morgan and Stark Investment have underwritten convertible bonds and equity shares worth US$150 million issued by China Greentown Group, one of the nation's largest private developers.

Hangzhou, Zhejiang Province-based Greentown said in a statement yesterday that the consortium managed a bond sale in the Singapore stock market for it on January 10.

The two US investors have also acquired an undisclosed ownership stake in the developer.

Greentown, which has more than 40 ongoing development projects across the country, has been actively seeking more financing tools since domestic banks restricted lending to the real estate industry last year.

JP Morgan and Stark Investment will also help Greentown secure an overseas listing to raise more capital in the near future, according to Song Weiping, Greentown's board director.

The deal is the latest example of involvement by overseas institutional investors in expanding domestic developer's financing channels.

"With a slowdown in volume and a drop in housing prices starting from the second half of last year, developers in China definitely feel pressure financially," said Michael T. Hart, head of research at Jones Lang LaSalle Shanghai.

Shanghai Greenland Group, one of the city's largest developers, last month received a 700 million yuan (US$87 million) loan from Hypo Real Estate Bank International, a German real estate fund, to finance residential projects in the city.

In the same month, China Vanke Co Ltd set up a real estate fund with Hong Kong-based Citic Capital Markets Holdings Ltd, to raise up to US$150 million.

Ralph X. Parks, Asia chairman of JPMorgan, expects the investment return from the Greentown deal will be no less than 20 percent. Greentown said its sales maintained growth last year despite the industry downtown.

20 January 2006 Beijing Time

China National Chemical Corp Aquires Large Australian Plastics Maker

MELBOURNE - China National Chemical Corp (ChemChina) has acquired Qenos, Australia’s top plastics maker, from Orica and Exxon Mobil in a deal reportly worth US$230 million.

ChemChina:

• established in 2004 through a Government-directed merger of two Chinese chemical firms
• Qenos purchase was ChinaChem's second deal in a month having bought Belgian animal feed producer Drakkar Holdings from funds advised by private equity investor CVC Capital Partners for an undisclosed sum.
  

Qenos:

• Australia’s only maker of polyethylene plastics
• recovering from a three-year slump, battered by low polyethylene prices and poor operations
• 850 employees
• annual capacity to produce about 500,000 tonnes ethylene, a basic building block for plastics, and 50,000 tonnes of propylene.
• Will recognise an after-tax loss of A$34 million on the sale.

Orica:

• Australian company and the world’s biggest maker of commercial explosives
  

Top Earning Non-State Firms

Lenovo has emerged on top of the top earning 500 non-governmental enterprises in China in 2003, according to a list published by the All-China Federation of Industry and Commerce in late August.
Asia Times Online - News from greater China; Hong Kong and Taiwan.

Yahoo in China

Yahoo, invested $120 million in a Chinese search engine in 2003. Last year it started an auction site in China, where total online revenue hit $1.1 billion.
IHT 21 July 2005

Cisco Invests $32M in Shanghai VOIP Research Centre

Cisco is targeting the networking growth market of Asia with significant investments, including $32 million over the next five years for a Chinese research center located in Shanghai, the launch of a venture capital firm in India, and the establishment of new financing services for small and medium-sized business customers in Korea.

Cisco will hire 100 employees over the next 18 months in the Shanghai facility, which will focus on Voice over Internet Protocol (VoIP) technologies and other new features for telecommunications equipment, particularly for Chinese telephone carriers. It will open in the second half of 2005. Daniel Scheinman, senior vice president of corporate development for Cisco, noted that China's consumers rapidly adopt advanced technologies, and so the country is a breeding ground for new communications applications.

"By being closer to potential customers, it will help our engineers understand their requirements and react more quickly to their needs," Scheinman said in a statement.

This will be the first Cisco research center in China, although it has invested heavily through the years in Chinese startup companies. It has already spend $250 million in direct and indirect investments in Chinese startups.

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