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Carlyle, Sequoia-led consortium offers to buy Warburg Chinese hotel stake

27 Sep 2012

Warburg Pincus-backed budget hotel chain 7 Days Group has received a take-private offer from a consortium including Carlyle, Sequoia Capital China and existing shareholders.

The $4.23 per ordinary share and $12.7 per American Depository Share offer, which values the Chinese company at about $635m, represents a 20 per cent premium on Tuesday’s closing price.

Warburg owned 16 per cent of 7 Days at the end of March, according to a filing with the US Securities and Exchange Commission, while emerging markets investor Actis held 11.6 per cent.

Co-chairmen Boquan He and Nanyan Zheng held a 32.7 per cent interest, the filing shows.

7 Days first became part of Warburg’s portfolio through a $25m stake purchase in 2006, which was repeated a year later.

In 2008, Actis China and Warburg Pincus Asia invested an additional $65m for an undisclosed stake.

Carlyle picked up a controlling 49 per cent stake in Chinese designer hotel operator Mandarin Hotel Holdings in July, in a bid to tap burgeoning middle class and domestic consumption in the world’s second largest economy.

Carlyle Asia Partners III bought the stake and has subsequently become the largest shareholder in the business.

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