BY Richard Summerfield
A consortium of investors backed by private equity firms Warburg Pincus and General Atlantic have agreed to acquire Chinese online classifieds company 58.com in a deal worth $8.7bn.
The deal has been unanimously approved by the company’s board and is expected to close in the second half of 2020.
The take-private consortium includes Warburg Pincus Asia LLC, General Atlantic Singapore Fund Pte Ltd, Ocean Link Partners Ltd, 58.com chief executive officer Jinbo Yao and Internet Opportunity Fund LP, an entity controlled by Yao, which has about 42 percent of the voting power in 58.com, the Chinese equivalent of Craigslist.
The consortium plans to fund the merger through a combination of cash contributions, rollover equity contributions from certain shareholders and $3.5bn in term loans from Shanghai Pudong Development Bank Co, Ltd.
According to a statement announcing the deal, 58.com shareholders will get $56 in cash for each American depositary share, a premium of nearly 20 percent from when the company got the first take-private proposal in April.
The deal would make 58.com the latest in a recent string of Chinese companies to delist from New York and comes just days after online car information provider Bitauto announced it had entered into a similar deal. Bitauto agreed to be taken by private by an investor group backed by gaming and social media firm Tencent Holdings Ltd for $1.1bn in cash.
Chinese companies have been pulling out of the US markets at the fastest pace since 2015 this year. Prior to the announcement of 58.com’s sale, US-listed Chinese companies have announced four go-private deals with a combined value of $8.1bn including debt, according to Bloomberg.
Interest in Chinese take-private deals has increased as Sino-US tensions have risen in recent years. Many companies have been forced to consider the merits of maintaining a New York listing rather than relocating to Shanghai or Hong Kong.