By Rick Carew And Fanny Liu
HONG KONG--Oaktree Group LLC is exiting its flagship Asian
private equity investment, Fusheng Group, according to people
familiar with the situation, in a deal that could value the
business around $1 billion and signals the shift of the big U.S.
investor away from buying controlling stakes to potential
distressed investments in Asia.
Oaktree has hired UBS AG to sell its seven-year-old stake in the
Taiwanese conglomerate, according to people with knowledge of the
matter.
The sale process of Fusheng, which was worth US$850 million when
Oaktree bought it in 2007, is still at an early stage and it is
unclear which bidders could emerge.
Oaktree owns a 48% stake in the conglomerate, which manufactures
golfing equipment, air compressors, and electronic products. A key
provision in its agreement that was triggered in March allowed it
to sell its stake, or "drag along" its majority partner, Taiwan's
Lee family, in a sale of the business, even though Oaktree holds
the smaller stake.
The "drag along" provision, negotiated in the original deal,
gives Oaktree certain protections and a greater degree of control
over the sale process, despite the share structure. It is unclear
whether the final sale will result in buyers purchasing only
Oaktree's shares or full control of the business. It is also
possible that the Lee family could increase their ownership.
A company official at Fusheng told The Wall Street Journal that
the majority shareholders won't contest the sale by Oaktree, whose
seven-year-ownership is relatively long for private-equity firms in
Asia. "We understand that it is about time for a private-equity
firm like Oaktree to seek an exit," the Fusheng official said. "We
won't oppose that."
Oaktree made a splash when it took Fu Sheng Industrial Co.
private in 2007, valuing the business at over $850 million in one
of the largest foreign private equity deals in Taiwan at that
point. Effectively, Oaktree bought out the public shareholders. The
Lee family rolled over its 52% into the business and the two
shareholders worked together to restructure the businesses under
the Fusheng Group banner.
Write to Rick Carew at rick.carew@gmail.com
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