* Deal gives CVC substantial stake and greater control of
EIC than Actis -sources
* EIC coaches Chinese students planning to study overseas
* Lack of IPO exits seen driving stake sales to private
By Stephen Aldred
HONG KONG, Jan 10 Private equity firm CVC
Capital has agreed to invest over $200 million into China
education company EIC Group, buying shares from its founder and
rival private equity firm Actis Capital, two sources with
knowledge of the matter told Reuters.
The deal will give CVC Capital a substantial stake
and a greater level of management control over EIC than Actis
had, the sources said, without disclosing the exact stake CVC
EIC, which specialises in providing coaching services to
students in China seeking an overseas education, becomes the
latest in a series of China buyouts where business owners have
sold their shares to give more control to incoming investors.
The trend is fuelled by lengthy waits to get to a public
listing in China, where the securities regulator has lifted a
freeze on IPOs this month after a 15-month hiatus.
Actis and EIC did not respond to request for comments. CVC
declined to comment. Sources declined to be named as the deal
was not public.
Actis, an emerging markets private equity investor, in 2011
bought a minority stake in EIC for an undisclosed price. The
firm convinced the founder, Joe Li, to sell part of his shares
to provide CVC with an increased stake in the company.
CVC is no stranger to joint control structures. The firm in
2011 struck a deal with Indonesia's cable television and
Internet operator PT Link Net which gave them a 49 percent stake
for $269 million, Reuters reported at the time.
Owners of China's small and medium-sized companies prefer to
exit their investments through IPOs, which tend to generate
But stricter regulations for offerings in China, a choppy
public market in Hong Kong and tighter credit conditions are
helping private equity firms, which are unable to exit minority
stakes through public listings, convince owners to give up
control, sources have said.
CVC agreed a similar deal to invest in high-end restaurant
chain South Beauty late last year, which had failed to get to a
listing. That followed an earlier deal for Swedish firm EQT
Partners to take majority control of RCS Group Co for around
$170 million. EQT bought stakes from both the Chinese owner and
private equity backer Warburg Pincus.