The Wall Street Journal-20080206-Chinese Company Gets Room to Grow in Private

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Chinese Company Gets Room to Grow in Private

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HONG KONG -- Asian private-equity firm MBK Partners LP's offer to pay S$357 million (US$252 million) for a Chinese pharmaceutical company is a rare example of an Asian management-led buyout.

People familiar with the transaction say the deal is intended to shelter AsiaPharm Group Ltd. from scrutiny by public investors and stock-market regulators as it aspires to grow amid China's rapidly developing drug industry.

Not having to answer to public shareholders with quarterly earnings announcements, they say, will allow AsiaPharm to embark on acquisitions on the mainland. AsiaPharm specializes in creating delivery mechanisms, such as injections, for oncology and cardiovascular treatments.

If the tender offer of 72.5 Singapore cents a share is successful, the company will delist its shares on the Singapore stock exchange.

AsiaPharm executives, who hold a combined 44.17% stake, have agreed to swap those shares for a stake in a new holding company set up by MBK. People close to the deal say it is unclear how large management's new stake will be.

Asia's stock markets had dissuaded business owners, especially in India and China, from offering ownership stakes to private funds.

This hasn't been the case in Singapore. Last year, the city-state represented the fifth-biggest buyout market in Asia, with deals valued at a combined US$2.6 billion, according to Thomson Financial.

MBK, started and led by former Carlyle Group executive Michael B. Kim, has made investments in Taiwan and in South Korea, among others.