Goldman fund plans to invest $250 million in China’s Geely
22 Sep 2009
US investment banker, Goldman Sachs Group Inc (Goldman Sachs) plans to invest $250 million in Geely Automobile Holdings Ltd (Geely), China's largest private car maker, by acquiring Geely's convertible bonds and warrants, Wall Street Journal reported Saturday.
The investment will be made through Goldman Sachs Capital Partners, a private equity unit of Goldman Sachs, engaged in leveraged buyout and growth capital investments globally. The deal when completed is expected to provide the fund about 15 per cent stake in the Chinese carmaker.
Geely plans to use the investment to triple its annual production capacity from the current level of 50,000 units to 150,000 units from its plant in Hunan province, and also acquire auto-related assets from its parent company, Geely Holding Group.
Both Geely and Goldman are quiet on the matter although observers believe that the deal is basically complete, but some technical details have to be worked out, and an announcement is expected early this week.
Shares of Geely were suspended on the Hong Kong Stock Exchange last Wednesday pending an announcement regarding the issue of bonds and warrants, though the details were not disclosed. Geely shares dropped 3.2 per cent to HK$1.79 on trading, before the suspension.
Few days ago, Hangzhou-based Geely Holding Group disclosed its intention of acquiring Ford's Swedish unit, Volvo jointly with local financial institutions. It is believed that the talks have been ongoing for several months and some analysts have doubted the group's financial strength to make the huge acquisition which could amount to approximately $2 billion.
Since 2007, Geely has been working with England's Manganese Bronze Holdings, the maker of London Black Taxis, for the manufacture of the taxis in China through a joint venture. Geely holds 20 per cent stake in the joint venture company, which started commercial production of the London Taxis in 2008, from its Shanghai plant.
New York-based Goldman Sachs Capital Partners VI fund, which is the current investment vehicle for Goldman Sachs, raised approximately $20 billion in 2007 from institutional investors, high net worth individuals and Goldman Sachs itself targeting sizeable returns through negotiated investments.
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