29 October, 2009
UPDATE 1-China No.2 PC maker raising $293 mln PE fund -sources
* First private equity fund for Founder Group
* Focus on investments in tech, media and telecom sectors
* To seek new profit streams besides traditional PC sales (Adds quotes, details and background)
By George Chen, Asia Private Equity Correspondent
SHANGHAI, Oct 29 (Reuters) - China's No. 2 PC maker, Founder Group, is raising a 2 billion yuan ($293 million) private equity fund with a focus on technology, media and telecom sectors as it seeks new profit streams, sources said on Thursday.
It would be Founder Group's first private equity fund as it faces tough competition in the computer business. Its bigger PC rival, Legend Holdings, established two investment firms -- Legend Capital and Hony Capital -- years ago, and the two are now very active players in China's private equity industry.
The fund would be denominated in the yuan because major institutional investors, so-called "limited partners" in the private equity fund, include many domestic enterprises, said a person who is familiar with the plans. Founder Group also plans to inject some money, but the amounts were not disclosed.
"Compared with Legend and Hony, Founder's first fund would be pretty small, but it's anyway a landmark move for Founder," said one source.
"Obviously, it comes later but finally it comes, better than never getting one," he added.
The sources, who have direct knowledge of the plan, declined to be identified because of the private nature of fund-raising process. Founder Group could not immediately be reached for comment.
Legend and Hony are running several multi-billion-dollar funds, and the two companies have become a stable profit stream to its parent company, which owns Hong Kong-listed Lenovo Group (0992.HK).
In recent years, the Chinese government, which has historically viewed private equity firms as speculators, is becoming more welcoming of private equity funds to support the country's economic growth, thereby creating more local jobs.
FINANCIAL AMBITION
Founder Group, which was founded in Beijing in 1986 with a small investment from Peking University, has a Shanghai-listed arm, Founder Technologies (600601.SS).
In the traditional PC industry, Lenovo is the market leader in China and Founder Group's market share is ranked fourth, behind Hewlett-Packard Co (HPQ.N) and Dell Inc (DELL.O). Lenovo acquired IBM's (IBM.N) PC business in 2005.
Besides the PC business, Founder Group has already entered other industries including health care, securities and real estate sectors to diversify its investments.
In September, Tang Shisheng, former chairman of China's Hong Yuan Securities (000562.SZ), joined Founder Group as a senior vice president, responsible for financial and investment business including private equity funds, said the sources.
Tang was a key member of a team helping Morgan Stanley (MS.N) set up China's first investment banking joint venture, China International Capital Corp, in 1995.
Tang's joining with the Founder Group was widely seen as reflecting the traditional PC maker's ambition to tap non-PC businesses.
Founder Group is also a local partner of Credit Suisse (CSGN.VX), and the two have already launched an investment banking joint venture, based in Beijing.
For related Asian private equity news, Reuters 3000 Xtra users can double click on: [LEN-RTRS-ASIA-PVE] ($1=6.827 Yuan) (Additional reporting by Melanie Lee in Shanghai and Kelvin Soh in Taipei; Editing by Ken Wills)
Source: http://www.reuters.com
UPDATE 1-China No.2 PC maker raising $293 mln PE fund -sources Added: (29.10.2009)
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