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August 12, 2009

CHINA: Private equity swoops on Wumart

Chinese retailer Wumart Stores has struck a HK$1.65bn (US$212.9m) share deal with private equity firms TPG and Hony Capital.

Chinese retailer Wumart Stores has struck a HK$1.65bn (US$212.9m) share deal with private equity firms TPG and Hony Capital.

Wumart, the biggest retailer in Beijing, said today (12 August) that the two firms had agreed to buy a combined 100m so-called ‘H’ shares in the business for HK$11 a share.

In a separate deal, Wumart will sell 41.52m unlisted domestic shares to Hony Capital, and 8.48m shares to Hony’s parent, Legend Holdings, at CNY9.26 (US$1.35) per share.

After the transactions are complete, the funds will hold a 10.95% stake in Wumart, which posted a 21% jump in half-year profits yesterday.

Hong Kong-listed Wumart said Hony and Legend would help the retailer in its bid to list in mainland China within three years.

Meanwhile, TPG and Hony will be able to appoint one representative each onto Wumart’s board and form an M&A committee.

“The investors are experienced partners to entrepreneurs and growth companies, and each has a successful track record of investments in the People’s Republic of China,” Wumart said.

“The board intends to apply the net proceeds from the Proposed Issuances to fund the continued expansion of the Group’s store network in the People’s Republic of China and potential acquisitions.”

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