CDC Corporation’s China.com Subsidiary Expects to Realize Significant Gains from Private Equity Fund Investment
13 Abril 2011 - 9:00AM
Business Wire
CDC Corporation (NASDAQ: CHINA), a leading China-based
value-added operator of, and growth investor in, hybrid
(SaaS/On-Premise) enterprise software, IT Services, and New Media
assets, today announced that its subsidiary, China.com, Inc.’s
investment in a Beijing-based private equity fund (the “PE Fund”)
has been producing significant returns.
This PE Fund invests in leading China-based enterprises, and
approximately 50 percent of the investments are in the sectors of
manufacturing, data technology, communication and energy sectors.
As of December 31, 2010, the latest audit report of the PE Fund
indicates that it has achieved a return multiple of approximately 4
times, and a gross internal rate of return in excess of 70
percent(1).
China.com has committed approximately (USD) $14.0 million in the
PE Fund, and has received approximately (USD) $3.0 million in
distributions since 2009.
“We are very pleased with the impressive return on our
investment,” said Sammy Cheng, CFO and executive director of
China.com Inc. “China.com plans to collaborate with certain of the
portfolio companies to help optimize their operational efficiencies
through our China portal, on-line gaming and webgame business
operations in China. We are seeking either to invest in, or
co-manage, more China-focused funds. We are also planning to launch
similar funds in China. We believe that our investments will help
shareholder value through our participation in the robust returns
of China’s rapid economical growth, particularly in the high tech
and new media sectors.”
More distributions are expected in the coming year given almost
50 percent of the companies in the fund’s portfolio have recently
been successfully listed on the China and Hong Kong stock exchanges
and other portfolio companies are considering listing as well. With
an expected distribution in 2011, CDC Corporation expects
additional cash flow contribution to the group; moreover, the
company is planning on pursuing several strategic partnerships with
some of the fund’s portfolio companies to further unlock their
values.
“The recently issued audited financial statements of the PE Fund
indicate that it is been doing very well, achieving an almost four
times return on investment since inception in 2007,” added John
Stone, Chief Financial Officer of CDC Corporation. “China.com
carries the value of this investment at its historical cost basis
of $10.0 million. This particular fund has achieved significant
returns in the year ended December 31, 2010 since almost half the
businesses the fund invested in have been listed in relevant stock
exchanges. While past results are not a guarantee of future
performance of this or any other PE Fund, we believe that China.com
has a reasonable expectation of realizing significant income from
this important investment. Since the PE Fund has a maturity date in
2014, we cannot currently determine the final return China.com may
receive on this investment.”
About CDC Corporation
CDC Corporation is a China-based value-added operator of, and
growth investor in, hybrid (on premise and SaaS) enterprise
software, IT, and new media businesses. The company pursues two
value-added investment strategies. The first strategy includes
actively managing majority interests in its core portfolio of
hybrid enterprise software, IT services and New Media businesses,
adding value by driving operational excellence, top-line growth and
overall profitability. The second strategy includes identifying and
executing on opportunities to co-invest with leading venture
capital and private equity funds through minority interests in
fast growth companies in emerging markets related to CDC
Corporation’s core assets. This second strategy, which complements
the first, helps to mitigate risk and enhance deal flow for the
company. CDC Corporation expects to deliver superior returns and
additional value for its shareholders through these strategies, as
well as through its plans to declare and pay regular dividends in
the form of registered shares of its publicly listed subsidiaries
and other assets. For more information about CDC Corporation
(NASDAQ: CHINA), please visit www.cdccorporation.net.
(1) The management, operation, policy and conduct of the PE Fund
is vested exclusively in its general partners. China.com is a
limited partner in the PE Fund and has accounted for it’s
investment in the PE Fund at cost less any impairments, because the
range of reasonable fair value estimates is so significant that the
directors of China.com are of the opinion that their fair value
cannot be measured reliably. China.com’s remaining commitment in
the PE Fund is approximately (USD)$2.0 million. The timing of any
capital contributions is generally on an “as needed” basis. The
term of the PE Fund is seven years ending in 2014 unless terminated
earlier pursuant to the partnership agreement.
Cautionary Note Regarding Forward-Looking Statements
This press release includes "forward-looking statements" within
the meaning of the United States Private Securities Litigation
Reform Act of 1995. These forward-looking statements include
statements regarding our expectations for any returns or
distributions on this private equity investment, expectations
regarding the range of reasonable fair value estimates, our
expectations with respect to future performance or distributions
from the PE Fund, our beliefs and expectations for the future
public listing on any portfolio companies in the PE Fund, our
expectations or future cash flow from the PE Fund and the amount
thereof, if any, our plans to collaborate with PE Fund portfolio
companies and the scope and success of any such collaborations, our
plans and expectations with respect to future investments, as an
investor or manager, in China-based funds, our plans with respect
to launching similar funds in China, our expectations regarding our
investments and the impact thereof on shareholder value, our
expectations that CDC Corporation will receive any distributions or
cash from the PE Fund, our expectations regarding the continuation
of receiving any future or additional distributions or returns from
our majority and minority direct and indirect investments and any
amounts thereof, if at all, our beliefs regarding our strategies
for providing value, our goals and expectations regarding any
potential yields to our shareholders, and other statements that are
not historical fact, the achievement of which involve risks,
uncertainties and assumptions. These statements are based on
management's current expectations and are subject to risks and
uncertainties and changes in circumstances. There are important
factors that could cause actual results to differ materially from
those anticipated in the forward looking statements. If any such
risks or uncertainties materialize or if any of the assumptions
proves incorrect, our results could differ materially from the
results expressed or implied by the forward-looking statements we
make. Further information on risks or other factors that could
cause results to differ is detailed in filings or submissions with
the United States Securities and Exchange Commission made by CDC
Corporation in its Annual Report for the year ended December 31,
2009 on Form 20-F filed on June 30, 2010. No assurances can be
given that CDC Corporation, or any of its subsidiaries, affiliates,
or minority or majority investments or business units, will receive
any proceeds, distributions or cash from the PE Fund or any other
investment. Future dividends or other distributions, if any, may be
paid at reduced rates and amounts than those that may have been
previously-provided, or any such dividends or distributions may
even be eliminated. All forward-looking statements included in this
press release are based upon information available to management as
of the date of the press release, and you are cautioned not to
place undue reliance on any forward looking statements which speak
only as of the date of this press release. The company assumes no
obligation to update or alter the forward looking statements
whether as a result of new information, future events or otherwise.
Historical results are not indicative of future performance. For
these and other reasons, investors are cautioned not to place undue
reliance upon any forward-looking statement in this press
release.
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