Chinese fund GO Scale Capital to seek further takeover deals

Mainland investment fund plans to use winning Philips unit bid as model for more buyouts

PUBLISHED : Thursday, 02 April, 2015, 10:26pm
UPDATED : Wednesday, 15 April, 2015, 3:31pm

Mainland investment fund GO Scale Capital will use its US$2.8 billion winning bid for Philips's lighting unit as a model to pursue other potential takeovers in areas such as biomedicine and clean energy, its executives said.

Beijing-based GO Scale has roped in well-connected mainland internet and green technology investors, such as GSR Ventures and billionaire solar magnate Cheng Kin Ming. US-based Oak Investment Partners is also a backer of the fund.

The last-minute Philips bid trumped marquee buyout firms, driving home the reality that a new breed of Chinese suitors with deep business connections and confidence to strike global deals are here to stay.

GO Scale Capital is now seeking acquisitions in life sciences and new materials among others.

"It's a model for us in the future, linking up global resources with the China market," Cheng told a media conference, referring to the Philips deal.

GSR Ventures has about US$1 billion under management, while bigger partner Oak has invested US$9 billion since it was founded nearly 40 years ago. The two companies have previously jointly invested in LED lighting firm SunSun Lighting and battery maker Boston Power, where Cheng is also an investor.

GO Scale expects to generate about five times return on its initial investment in the Philips unit, called Lumileds, said Sonny Wu, chairman of GO Scale. GO Scale said the acquisition would be financed in part with its own funds, funds from Cheng's Asia Pacific Resources Development Investment, institutional partners and investors that have participated in GSR and Oak's funds.

Like other Chinese acquirers of global companies and brands, GO Scale plans to tap into demand from mainland China.

"The future is more about consolidation of the industry. For example, Philips Lumileds could be the platform to start to absorb potential technologies or industry players that can help it grow even faster," Kwan said.