Gome to raise nearly $447 million from Bain Capital and other investors
The Boston-based private investment company Bain Capital LLC has decided to make a $432 million investment to acquire a minority stake in China's second-largest electronics retailer - the Beijing-based Gome Electrical Appliances Holdings Ltd. Along with the proposed Bain Capital investment, Gome intends raising a total of $447 million, with contributions from other investors.
According to the terms of the deal - about which the rumor-mills were abuzz for weeks - Bain Capital will be subscribing to seven-year bonds, which, if converted will give the company a 12.8 percent stake in Gome. The buyout firm said that its investment in Gome has largely come from the fact that it projects "extraordinary growth opportunities" in the Chinese consumer and retail industries.
Gome will get a much-required boost from the deal with Bain Capital, more so in the wake of its current phase of weakened sales as well as an ongoing probe of its founder and ex-Chairman, Huang Guangyu, who was arrested by the Chinese authorities in November on corruption charges.
Talking about the need for funds by Gome, prior to the Bain Capital investment announcement, analyst Fiona Wong - of Hong Kong-based Sun Hung Kai Securities Ltd - said: "Securing funds is the main concern for Gome. Once they have the funds, then they can see how to restructure their operations and stores."
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