Three private equity funds will pay cash for Asia Netcom's service business and undersea network China Netcom Group Corp (Hong Kong) and its parent firm will receive US$402 million in cash from selling its undersea cable carrier Asia Netcom to three private equity funds, which will probably enable the Hong Kong-listed unit to book a one-off gain, bankers close to the deal said. Sources said the US$168.84 million sale of the cable carrier unveiled by China Netcom on Monday was only the proceeds from the sale of Asia Netcom's service and sales business, which was injected by its parent company during the group's reorganisation before its 2004 listing. Parent China Network Communications Group Corp, which owns the 19,500km, 120 lit gigabytes undersea cable network, would receive US$233 million for its asset, they said. A banking source said that as the service and sales unit had a negative book value, China Netcom would record a one-off gain from the sale. 'But it's hard to say how much now as the accounting method to book it is still unclear,' the banker said. The three private equity investors are London-based Ashmore Emerging Markets Liquid Investment, Spinnaker Global Opportunity Fund, and New York-based Clearwater Capital. Simon Murray, the former group managing director of Hutchison Whampoa who has claimed that his General Enterprise Management Services fund was close to winning the deal with Ashmore and Spinnaker for a lower US$334 million, pulled out at the last minute. The deal is now pending regulatory approval. China Netcom and its parent firm are hopeful of getting it next month. Ashmore, which holds a range of telecommunications assets in Asia, is the biggest fund out of the three with US$20 billion assets under management, but the respective equity interest-split among the three has not yet been decided. Matthew Burlage, a banker at investment bank IRG representing the three private equity investors, said the new shareholders would give Asia Netcom three years before they decided whether to inject more capital so it could buy other companies, or exit possibly through an initial public offer. 'We are comfortable with the existing management so that they will invest in the business,' Mr Burlage said. He added that Asia Netcom - which will change its name - would hire more workers on top of its more than 400 staff worldwide. He said bandwidth-soaking applications, such as internet protocol television, online gaming, next-generation telecommunications services all pointed to surging demand for bandwidth capacity. Asia Netcom was known as Asia Global Crossing before China Netcom bought it on behalf of a consortium of two other investors for US$89.9 million in 2003, and injected US$120 million equity into the firm. China Netcom later bought out the two shareholders to wholly own the unit for an undisclosed amount in 2004.