Investors are preparing to pull out financial backing of Lenovo, the Chinese computer manufacturer which has previously enjoyed large investment from multinational private equity firms, according to sources close to Reuters.
Three investors, TPG Capital, its subsidiary, Newbridge, and General Atlantic are looking to exit from Lenovo with a multi-million dollar share placement, which will bring to an end what was considered a “landmark investment” in China.
TPG pumped $200 million into Lenovo five years ago to help it acquire IBM’s PC business, but times have changed and the San Francisco-based company is putting its shares on the market with a small discount.
General Atlantic invested $100 million while Newbridge invested a further $50 million.
TPG and General Atlantic will offer 282.26 million shares at prices between HK$5.45 ($0.70) and HK$5.53 ($0.71), depending on the end of day closing price, totalling some $201 million. The discount amounts to up to 1.43 percent, which is small enough to limit losses but large enough to encourage a quick sale.
In 2007 the three investment firms sold $306 million worth of shares, more than halving their investment in Lenovo, but the recent news sees them pulling out completely, which follows similar exits from other key Chinese investments like the Shenzhen Development Bank earlier this year.