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Alibaba ad deal completes Carlyle engineering feat

Tuesday, July 24, 2018

(Reuters by Robyn Mak) - An Alibaba advertising deal completes Carlyle's feat of financial engineering. Jack Ma's e-commerce titan is buying a minority stake in $24 billionFocus Media, some from the U.S. private equity firm. David Rubenstein's shop led a 2013 New York buyout and a profitable reverse-merger in Shenzhen, but a complex structure and rigid rules made exiting hard.

As part of the deal, Alibaba and an affiliated fund will buy existing shares, equivalent to an 8 percent stake in Focus, from four backers linked to Carlyle, FoutainVest, CITIC Capital and Fosun International. Five years ago, the quartet teamed up with Jiang to take Focus private after it was targeted by short sellers. The plan was to list it anew in Hong Kong.

Instead, Focus returned to public life on the Shenzhen bourse in 2015, when valuations across the border were soaring. It secured a so-called backdoor listing that valued it at $7.2 bln, nearly double what it was just two years earlier. Curbs on foreign investors owning mainland shares meant Carlyle and its crew had to design the deal creatively. That included housing the Focus shares in special-purpose offshore vehicles. A strict lock-up period also ruled out a quick sale.


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