News & Analysis

NewQuest sells energy firm China Hydroelectric

The Hong Kong direct secondaries firm has signed a deal to sell China Hydroelectric to a trade buyer, exiting an investment it has held through both of its funds.

-

NewQuest Capital Partners, a Hong Kong direct secondaries firm, has agreed to sell its holdings in energy firm China Hydroelectric to Shenzhen Energy in a deal worth $542.6 million, according to a statement filed with the Shenzhen Stock Exchange on Wednesday.

The firm held stakes in the company through NewQuest Asia Fund I and NewQuest Asia Fund II. The sale represents one of the biggest exits to date from NewQuest Asia Fund II, which is about 70 percent invested, and it also marks a significant exit for NewQuest’s first fund, which still has remaining investments.

The energy company began trading on the New York Stock Exchange in 2010, and NewQuest originally purchased a 25 percent stake in the company while still public through its first fund. It then increased its stake to 54 percent, still investing with its NewQuest Asia Fund I. Last year, NewQuest took the company private with an additional investment from NewQuest Asia Fund II, which holds at least a 41 percent stake in the company.  The deal was reportedly worth $190 million.

It wasn’t clear how much NewQuest will make from the sale.

Founded in 2006, Shenzhen-based China Hydroelectric operates small hydroelectric power plants in China and focuses on providing sustainable energy with low carbon emissions, according to its website.

NewQuest Asia Fund II is a 2013-vintage vehicle that closed slightly above target on $316 million in June 2014 after seven months of fundraising, according to PEI’s Research and Analytics division. NewQuest Asia Fund I is a $400 million vehicle that made its first investment in 2011. Investors in the firm’s funds include HarbourVest Partners and LGT Capital Partners, who backed the firm when it spun out of Bank of America Merrill Lynch’s Asian private equity team in 2011.

This year, NewQuest was part of a group including CDC Group, CX Partners and Bajaj that reportedly invested 3 billion Indian rupees ($45 million; €41 million) in microfinance firm Ujjivan.

NewQuest, China Hydroelectric and Shenzhen Energy weren’t immediately available to comment.

NewQuest Capital Partners manages over $700 million across its two funds and invests in the Asia-Pacific region, according to its website.