Business Activities News
- Warburg Pincus eyes stake in retailer
Date: 8-Jun-2007 Sources: (Shenzhen Daily)
U.S. private equity firm Warburg Pincus is in advanced talks to take a major stake in domestic retailer Red Star Furniture Group, a source close to the deal said Wednesday, as China's fast-growing home furnishing market draws increasing foreign interest.
'The two parties have been in talks for several months, and the stake Red Star would likely sell is less than 50 percent,'the source said. Final details have yet to be set but the negotiations have reached a late stage, added the source, who asked not to be identified.
The move marks Warburg Pincus' latest acquisition attempt in China, where outside investors, including Goldman Sachs and Carlyle, are racing to buy into some of the country's top performers.
A consortium led by Goldman agreed in early 2006 to take control of China's top meat processor Henan Shuanghui Investment & Development Co., followed by the Wall Street bank's announcement in November that it would buy a minor stake in Fuyao Group Glass Industries Co. for US$113 million.
Carlyle, which has invested in several Chinese industrial firms, is awaiting approval to take 45 percent of the country's biggest construction gear maker, Xugong Group Construction Machinery Co.
Warburg Pincus had previously expressed interest in an equity deal with Beijing-based Wangfujing Department Store (Group) Co., but no agreement has been announced.
China's home furnishing market is crowded with hundreds of players, from industry giant Home Depot Inc. and Kingfisher's B&Q to local players such as Yuexing Group.
Privately owned Red Star, headquartered in Shanghai, operates 33 outlets, mostly in the affluent east coast.
It sells furniture and home furnishings, targeting mostly the country's growing army of homeowners who are spending heavily on decorating newly purchased apartments.
Like many of China's other big private-sector firms, such as top low-voltage electrical products maker Chint Group, Red Star is eyeing an eventual stock market listing to improve its corporate structure and secure a fund-raising channel, the source said.
Hong Kong could be an option for the listing, but the firm has yet to work out the final details, the source added.
Sponsor Results:
