Hillhouse Capital wins bid to acquire 15% stake in China’s Gree Electric

Gree Electric Appliances Ltd. is displayed on an outdoor unit of a commercial air conditioner unit at the company's showroom in Zhuhai, China, on Wednesday, March 28, 2018. Gree is China's largest air-conditioner maker. Photographer: Justin Chin/Bloomberg

An investment fund backed by Hillhouse Capital won a bid to acquire a 15% stake in Gree Electric Appliances Inc., China’s largest air-conditioner maker, from its government-owned parent in a deal with an estimated value of $7.5 billion.

A review board selected Hillhouse-backed Zhuhai Mingjun over a consortium led by buyout firm Hopu Investment Management Co., Gree Electric said in a statement Monday.

Gree announced in April that its largest shareholder, state-controlled Gree Group, planned to sell a 15% stake. Gree Group had a total stake of 18.2% in the company, according to data compiled by Bloomberg. The 15% holding is worth about $7.5 billion based on the company’s market capitalization.

Shares of Gree Electric climbed as much as 3.9% in morning trading Tuesday. The stock has climbed 25% since before the company announce the plans in April.

The stake-sale move is in line with China’s push to reduce state ownership in highly competitive industries such as appliance makers. Analysts at the time said the move would boost the valuation of the Shenzhen-listed company, bringing it more in line with privately controlled rival Midea Group Co., while also improving operating efficiencies.

Bloomberg reported in June that the Hopu consortium, which included Temasek Holdings Pte., was in advanced talks for the stake. Gree said last month that the Hopu consortium and the investment fund backed by Hillhouse had both applied to buy a stake.

A Gree representative said the company had nothing further to add beyond the statement. A representative for Hopu couldn’t immediately be reached for comment.

Zhuhai Mingjun vowed to maintain Gree Electric’s management stability in its offer, and has written to them to invite their cooperation, Gree said in the statement. The share sale may pave the way for a formal management incentive plan at the manufacturer, according to Bloomberg Intelligence analyst Catherine Lim.

Bloomberg

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.