TCL, Unigroup to Form RMB 10 Bln Strategic Industries Acquisition Fund
TCL Corporation, 2/22/16
Chinese consumer electronics manufacturer TCL Corporation (000100.SZ) recently announced a partnership with Chinese state-backed private equity firm Tsinghua Unigroup, whereby the two companies will each contribute industrial and financial resources to jointly establish a RMB 10 bln industry acquisition fund.
The fund will focus on direct investments and acquisitions in several areas, including TCL and Tsinghua Unigroup's upstream, downstream, and related industries; technology, media and telecommunications industries (TMT); industries identified in the Ministry of Industry and Information Technology's "China Manufacturing 2025" development plan; and industries targeted by the Chinese government's "Internet +" initiative.
The industry acquisition fund will be created as a limited partnership and has been provisionally named the "Tibet Dongwei Xinghua Investment Center." The parties plan to contribute approximately RMB 1.802 bln in initial funding, of which TCL's wholly-owned subsidiary Xinjiang TCL Investment Company and Tsinghua Unigroup's wholly-owned subsidiary Tibet Ziguang Qingcai Investment Company will each subscribe for RMB 900 mln as limited partners. Tibet Dongwei Fund Management Center will contribute RMB 2 mln as general partner and fund manager.
The parties plan for an additional RMB 8.198 bln to be raised later from outside investors by general partner and fund manager Dongwei Fund Management Center, based on the fund's development circumstances and the progress of potential investment projects. Outside investors may be able to make direct capital contributions to invest in the fund, or may participate through subsidiary funds that may be established for this purpose.
TCL's announcement said that the partnership with Tsinghua Unigroup to establish the industry acquisition fund will take advantage of the two companies' strengths in their respective industries. Through specialized management and market operations, the fund will make investments and acquisitions in the consumer electronics industry to accelerate industry transformation and growth, and will promote capital growth through consolidation of electronics industry upstream and downstream resources.
Keywords: consumer electronics hardware funding TCL Corporation 000100.SZ Tsinghua Unigroup M&A
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