Chao infund talks for Sina shares bid | Shanghai Daily

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October 1, 2009

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Chao infund talks for Sina shares bid

THE management of Sina Corp, led by its chief executive, Charles Chao, is in talks with private-equity funds to back a plan for them to buy about US$180 million worth of shares in an effort to strengthen control of China's top Web portal, sources said yesterday.

Two China-focused private equity funds, CITIC Capital and FountainVest, were in talks with Sina's management team to provide financial support that would enable Sina's management to buy a 10 percent stake in Sina, the sources said.

"The buy-in helps raise management decision-making power and alleviates Sina's risk as an acquisition target," said Richard Ji, a Morgan Stanley analyst.

On Monday, Sina and Focus Media Holding Ltd announced that they would scrap their US$1.4 billion merger after months of government stonewalling over a deal that would have created China's biggest private sector media company.

Sina said in a statement released on Monday that it was issuing 5.6 million new shares to an investment firm called New Wave, led by Chao and senior Sina executives, for US$180 million.

FountainVest is a US$1 billion private-equity fund backed by Singapore state investor Temasek Holdings, while CITIC Capital, backed by China's powerful CITIC Group, is managing several funds worth about US$2 billion in total.

Zhang Yicheng, chief executive of CITIC Capital, is already on the board of Sina.

Based on the proposed sale price, Sina's management would buy the shares for about US$32.14 per share, or about an 16 percent discount to its last close of US$38.25 on Tuesday.

Despite selling at a discount, some analysts expressed doubt over whether Chao and his colleagues in the management group could afford to buy the shares on their own.

"It is our belief that this investment is currently unfunded, meaning Sina management will be seeking partners to fund this purchase," said Jason Brueschke, an analyst with Citigroup.

Meanwhile, the sources said United States buyout giant TPG Capital and Fountainvest backed Sina's failed bid for core assets of Focus Media founded by Chinese media tycoon Jiang Nanchun in Shanghai.

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