CLSA Capital fund, ARIA Investment Partners III, has invested $20 million in Unitech, with the investment announced on August 2. CLSA Capital now owns around 7% of Unitech.
With its investment CLSA Capital gets one board seat out of a total of seven. The fund's investment is subject to local private placement guidelines and has a lock-up restriction of three years, during which the private equity firm cannot sell its shares.
Unitech is a Taiwan-based printed circuit board manufacturer and one of the countryÆs three largest mobile handset PCB manufacturers. Its main competitors are Unimicron, Compeq and Wus Printed Circuit.
Key customers for Unitech include Motorola and Sony-Ericsson for handset PCBs and leading global positioning system (GPS) manufacturers such as Garmin and TomTom. Unitech serves both the market for replacement demand and new handsets.
Unitech is well positioned to benefit from changes in the industry which are likely to spur demand. Further, the industry enjoys entry barriers as it is both technology and capital intensive. Unitech has four plants in Taipei and one in Shanghai.
Unitech has been listed on the Taiwan Stock Exchange since 1997. Sources close to the deal comment that the share price of Unitech has appreciated since the firm first reviewed the deal with CLSA in January 2007. The deal has been struck based on a conversion price of NT$20.6 ($0.62), a discount of 26% to the June 22 price, which was the relevant date for price fixing.
CLSA Capital noted that Unitech was its first investment in Taiwan. In synch with other financial sponsors, the firm is bullish on future opportunities in the region.
The deal follows close on the heels of the much larger $549 million CVC investment in curtain manufacturer Nien Made. Even though the scale of the investments differs, the deal announced yesterday serves to reinforce the islandÆs status as one of the hot private equity destinations of the moment.
What remains to be seen is how the US meltdown and its ripple effect in Asia is going to affect the investment by financial sponsors in the region. Already, even before the meltdown, financing for private equity deals was said to be getting more difficult with the preferred ôcovenant-liteö structures drying up considerably.
CLSA Capital Partners is the alternative asset management arm of CLSA Asia-Pacific Markets. It has $1.5 billion under management across seven main funds including Aria III. The Aria series of funds are pan-Asian funds which target mid-market companies. CLSA Capital provides capital for expansion, acquisition and recapitalisation, to both listed and unlisted companies.
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