Mergers & Acquisitions

Citic unit in race with GIC, TPG to buy Singapore smart card maker Jing King, as deal making shifts to Southeast Asia

  • Citic unit, GIC and TPG are in a race to buy a 60 per cent stake in Singapore’s smart card maker Jing King Tech Group from RRJ Capital
PUBLISHED : Tuesday, 13 November, 2018, 12:51pm
UPDATED : Tuesday, 13 November, 2018, 11:02pm

China’s largest state conglomerate is in a race with Singapore’s sovereign wealth fund and one of the biggest US private equity funds for control of a Singapore-based maker of smart cards, in a sign that investors are shifting their sights to Southeast Asia for better valuations.

Citic Private Equity Funds Management, a unit of China’s state-run Citic Group – one of the world’s top owners of foreign assets – is in talks to buy a 60 per cent controlling stake in Jing King Tech Group from RRJ Capital, according to people familiar with the matter.

Also in the race are the Government of Singapore Investment Corporation (GIC) and TPG Capital, a U$75 billion US private equity firm based in Fort Worth, Texas, the people said.

RRJ Capital, founded in 2011, plans to exit from its US$100 million investment in Jing King, according to sources familiar with the matter. The Hong Kong-based investment firm has US$11 billion of assets under management.

Negotiations for the stake could conclude in a week, when RRJ is expected to select the winner, the sources said.

RRJ, founded by former Goldman Sachs banker Richard Ong, declined to comment. Among the firm’s limited partners are Singapore’s Temasek Holdings and the California State Teachers’ Retirement System (Calpers). Ong was also a founder and chief executive of Chinese private equity fund Hopu from 2008 to 2011 before establishing RRJ Capital.

Spokespeople at Citic, GIC and TPG were not available to comment.

The bid for Jing King underscores how investors are casting their sights away from China toward Southeast Asia for better value.

First-half mergers and acquisitions fell by 18 per cent in China to US$348 billion, according to PwC’s data, citing across-the-board declines in four sub-sectors: domestic strategic buyers, foreign strategic buyers, private equity deals and China outbound.

By comparison, Southeast Asia saw 55 private equity and venture capital deals valued at US$23.3 billion in the same period, a surge from 57 deals worth US$3.4 billion in the same period last year, according to Ernst & Young’s data.

“While the pace of deal activity in, and coming out of, China has certainly been slowing due to the trade war with the US and the capital control measures within China itself, the opposite has been the case elsewhere in Asia,” said Steven Tran, corporate partner of Hogan Lovells, who is not involved in the bids for Jing King. “Deal making in Southeast Asia has increased noticeably in recent years, both in the number of deals completed and total deal values. Singapore, for example, has become a relatively mature market unto itself.”

Founded in 1984, Jing King makes smart cards, and identity security devices used in retail banking. Its electronic Know Your Customer (e-KYC) service is a key element in its push toward fintech, including services in digital payment, identity verification for banks, financial institutions and government agencies.

Jing King has 2,000 employees on staff in China, Hong Kong and Southeast Asia. The company’s enterprise value is estimated at between US$500 million and US$535 million, which places a 60 per cent stake at about US$321 million.

The Singapore firm’s founder Lennon Tan said neither he nor Jing King’s management have any plans to sell the remaining 40 per cent they own in the company. He declined to comment on RRJ’s divestment plan.