Yingde’s suitor has track record selling Shenzhen Bank to Ping An
PAG Asia Capital, which came in with a HK6 per share offer for Yingde Gases, is led by the financier who engineered the first foreign investment in a Chinese bank.
PAG Asia Capital’s HK$6 per share offer to buy Yingde Gases Group this week raises the question why the buyout fund wants to be part of an industrial gas supplier.
The short answer may be that PAG, with US$16 billion of capital under management, considers China’s largest supplier of oxygen, argon and hydrogen an undervalued target.
The Hong Kong-based fund declined to comment, while its chief executive Shan Weijian could not be reached to comment.
Shan is a former senior partner of Newbridge Capital, a US$3.2 billion venture whose investors included TPG Capital, one of the world’s largest private equity funds.
He engineered Newbridge’s investment in Shenzhen Development Bank, making it the first Chinese bank to be controlled by foreign capital. Ping An Insurance bought Newbridge’s stake in 2009, injected a banking unit into it and renamed the entity Ping An Bank.
That deal earned Newbridge a 10 times return on its investment.
In 2010, Shan left Newbridge and TPG to head PAGm which has invested over US$30 billion across Asia, including stakes in the Universal Studios in Japan.
PAG can take control of Yingde if it can own more than half of the company, including whatever shares it already owns or will buy from the open market, on top of the 41.9 per cent from the three co-founders.
It's not known whether the fund has already been accumulating any Yingde shares from the open market.
Yingde’s shares have more than doubled since January, with 13.68 million shares changing hands every day on average, more than four times the daily average for the whole of last year.
Event-driven funds, or traders who take positions in companies amid shareholder tussles and other significant events, may have accumulated 15 per cent of Yingde’s stake, the company’s chairman Zhao Xiangti said this week.