Herbert Smith advises on management buyout in the PRC IT sector

LAWFUEL – Legal Jobs & Law Newswire – Herbert Smith has advised SAIF Partners, Hony Capital (a subsidiary of Legend Holdings) and IDG Technology Venture Partners on the HK$2.7 billion (US$350 million) management buyout and mandatory takeover offer for Digital China Holdings, a Hong Kong-listed IT services company based in mainland China. It is one of the largest management buyouts in the PRC IT sector.

Legend Holdings, as the controlling shareholder of Digital China, and General Atlantic Partners sold a combined 42.94% of shares to the private equity firms and Kosalaki Investments, a firm wholly owned by Mr Guo Wei, president of Digital China. Upon the close of the takeover offer, the consortium comprising SAIF, Hony Capital, IDG VC and Mr Guo became Digital China’s biggest shareholder with a stake of 40.29%, followed by Legend Holdings with 16.23%.

Digital China is one of the largest IT products distributors and systems integrators in China. The company has an alliance with many leading global IT firms and its clients include governments, major financial institutions and telecom carriers.

Hong Kong partner Tommy Tong led the transaction. He was supported by consultant Michelle Chan, senior associates Jenny Iong and Betty Tam and associate Derek Fong.

Tommy Tong commented:

“This takeover follows our recent private equity successes in Hong Kong and mainland China. We are delighted to have acted for SAIF, Hony Capital and IDG VC in bringing this transaction to a successful close. We look forward to building upon our relationship.”

Digital China and Legend Holdings were advised by Norton Rose. General Atlantic Partners was advised by Paul Weiss. Piper Jaffray Asia was the financial advisor to the joint offerors.

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