Private equity firms eye GOME

Bain, Carlyle, KKR, Warburg Pincus and the Hopu Fund are among those reportedly interested in a 20 percent stake in the Chinese retailer.

Private equity firms and strategic buyers have expressed interest in buying the shares of GOME Electrical Appliances Holding, an electrical appliances and consumer electronics retailer.

Global firms Bain Capital, The Carlyle Group, Kohlberg Kravis Roberts, Warburg Pincus and China-focused Hopu Investment Management are among those interested in purchasing up to 20 percent of GOME, according to Bloomberg.

“GOME has a standard general mandate to increase the amount of equity in the company by 20 percent. It can do this without a shareholder vote. However, most companies have this mandate as well,” said a spokesman for the company. “The company is in a strong cash position and there is no urgent cash crunch,” he added.

GOME suspended trading in November following allegations that Huang Guangyu, the company’s chairman, executive director and controlling shareholder, was detained for share price manipulation.

Huang resigned as director of the company in mid-January. He owns about 36 percent of GOME.

Warburg Pincus currently owns less than 5 percent of the company, a source said. In 2006, the firm injected $150 million into the GOME for an approximate 9.7 percent stake, which took the form of $125 million-worth of five-year convertible bonds and $25 million in five-year warrants.

Founded in 1987 by Huang and based in Beijing, Gome is one of China’s largest electrical appliances retailers.

Bain, Warburg Pincus and Hopu could not be reached for comment at press time. Carlyle and KKR declined to comment.