CVC reaches Nirvana with take-private

Nirvana Asia is about to delist for the second time. But despite getting no premium to the IPO price, investors are overwhelmingly in favour.

Nirvana Asia, a Malaysian funeral services company listed in Hong Kong, is about to finish a $1.1 billion privatisation, marking the second time the company has delisted from an Asian exchange.

CVC Capital, the private equity firm, is taking the company private through Asia Memorial Group, a company it controls. Asia Memorial and Nirvana made a joint announcement about the delisting on Thursday, telling investors it had been approved by an extraordinary general meeting (EGM) as well as by the Hong Kong stock exchange.

The deal makes Nirvana just the latest foreign company to delist from the Hong Kong exchange. Hong Kong appears to be losing its charm for foreign companies — Macau casino operator Melco Crown, Brazil’s Vale and most recently China’s Dalian Wanda have all opted to delist.

But Nirvana has pedigree when it comes to take-privates. The company first listed as NV Multi Corporation on the Kuala Lumpur Stock Exchange in 2000 and subsequently privatised in 2010. Nirvana paid investors RM300 million, equivalent to $97 million.

Two years later, Nirvana listed on the Hong Kong stock exchange at a valuation more than 11 times higher. The company raised $261 million selling stock to Hong Kong investors, who priced the company at $1.1 billion.

That is the same amount CVC Capital is now offering to buy the company. CVC Capital offered $1.1 billion for Nirvana in July this year, giving investors HK$3 per share. That is a premium of 37.6% over the 30-day average closing price prior to the offer, according to CVC’s announcement.

Although CVC’s offer price is the same as Nirvana's IPO price, the deal is still a good outcome for Nirvana’s existing shareholders and the founding family, reckons one investor.

“Nirvana has been trading 30% under water since IPO with no sign of recovery due to sluggish sales numbers,” said an IPO investor who holds the stock.  “I’m very happy that CVC has offered such a high premium to take it private.”

Indeed, the voting result at the Court Meeting and the EGM were exceptionally good. For the court meeting, 99.54% of present and proxy shares were voted in favour while only 0.74% of total independent shares voted against, according to the statement. At the EGM, investors holding over 98% of shares voted in favour of the deal.

Nirvana’s IPO immediately turned sour for investors. It was priced at the bottom of the range and the stock price tumbled 30% on its first day of listing. Since then, the share price has had a roller coaster performance. It bottomed at HK$1.71 two weeks after listing, shot back up 70% to HK$2.8 before falling to HK$1.8 middle of last year.

 “Nirvana is just a small-cap stock and its market liquidity has been poor, with three-month averaged daily turnover less than $1 million,” according to a person familiar with the situation. “It does make sense for it to privatise.”

Nirvana is the largest integrated funeral service provider in Asia in terms of contract sales, revenue and land bank, according to consultants Frost and Sullivan. It has 12 cemeteries, 14 columbarium facilities — storage centres for urns — and two funeral homes in Malaysia, Singapore and Indonesia, according to the company website.

After the privatisation, Tan Sri Kong, the founder of Nirvana, will continue to be its chief executive, according to the press release by CVC. He currently owns around 42% of the company.

Nirvana’s last day of trading was September 29. The delisting date is October 7 and the payment date is October 17.

After Nirvana delists, Fu Shou Yuan International will be the only company in the funeral services sector listed on Hong Kong stock exchange.

CVC Capital Partners, founded in 1981, is one of the world’s leading private equity and investment advisory firms. It manages over $33 billion of assets and has over 420 staff employed throughout Europe, Asia and the US, according to the company website.

Besides Nirvana, it has also acquired Logen, South Korea’s second largest parcel delivery company, and Hasegawa, a Japan leading elderly and children care services provider recently.

UBS is the financial adviser for Nirvana Asia. CVC Capital Partners’ is JP Morgan.

Sullivan & Cromwell is the legal adviser for Nirvana. Clifford Chance is CVC Capital’s

¬ Haymarket Media Limited. All rights reserved.
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