UPDATE 2-KKR, TPG among firms eyeing Nasdaq-listed AsiaInfo-sources

Tue Feb 21, 2012 8:44am EST

* CITIC Capital hires Morgan Stanley as adviser-sources

* Trade buyers expected to launch rival bids-sources

By Stephen Aldred and Nadia Damouni

HONG KONG/NEW YORK, Feb 21 (Reuters) - Global private equity firms, including KKR & Co LP and TPG Capital , and strategic rivals, are lining up potential bids for U.S.-listed AsiaInfo-Linkage Inc, sources with direct knowledge of the matter told Reuters, in a deal expected to be worth more than $1 billion.

Shares of the China software and IT company rose nearly 7 percent in premarket trading on Tuesday, at around $12.50.

AsiaInfo received an offer from CITIC Capital in January, financial details of which were not disclosed, and it has since appointed Goldman Sachs as a special adviser.

At the time of the offer, AsiaInfo, whose clients include telecom groups China Mobile, China Unicom and China Telecom, had a market capitalization of $714 million -- a value that has since risen to more than $800 million.

Shares of several U.S.-listed China companies have been battered by a series of accounting scandals that have tainted the entire sector, and private equity funds have been hunting for potential targets..

AsiaInfo was not subject to any accounting scandals, yet its shares are still down about 44 percent over the past 12 months.

CITIC has appointed Morgan Stanley as a buyside adviser, the sources said.

The sources said private equity funds were looking to structure a joint bid with CITIC or potentially bid solo.

Meanwhile, separate sources said bids may emerge from strategic rivals such as Amdocs, Oracle, IBM and Ericsson, who may be interested in the company's billings software.

But while AsiaInfo Linkage is not a state-owned asset, its core clients include state-owned companies, and many expect any final solution on the privatization to favor a China company.

"Most bidders expect CITIC to have some part in a final deal, since this is an important asset for China," said one banker.

No bidding deadline has been set, said the sources, who declined to be named as they were not authorized to talk to the media.

AsiaInfo-Linkage, KKR, Morgan Stanley and TPG all declined to comment. Sources were not authorized to speak with the media.

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