PE-Backed Focus Media’s Back Door Listing In Limbo

Shanghai-based digital media and display advertising firm Focus Media Holdings Limited is seeking other ways to re-list in China, as the shell company in its previously planned back door listing deal becomes entangled in a potentially lengthy investigation.

The company may consider a listing on the strategic emerging board, which the Shanghai Stock Exchange Plans to launch early next year, says Chinese media reports citing insiders.

The Chinese regulators suspended initial public offerings in early July after the country’s stock market plunged.

Focus Media was de-listed from the NASDAQ after a go-private deal led by company founder and a group of private equity firms in 2013.

In March, Focus Media planned to re-list on the Chinese A-share market via a reverse merger with Shenzhen-listed Jiangsu Hongda New Material Co., Ltd., a rubber producer and distributor based in Yangzhong city, Jiangsu province.

The companies released official merger plans in May. But a month later, Jiangsu Hongda revealed that its chairman Zhu Dehong had been investigated for securities law violations.

On July 30, Jiangsu Hongda said its shares would continue to be suspended, leaving Focus Media’s back door listing deal in limbo.

Focus Media’s founder, Jason Nanchun Jiang, holds 26.73% of the company currently. FountainVest Partners, Fosun International Limited, CITIC Capital China Partners each holds 19.71%, 17.43%, 9.85%, respectively.

The Carlyle Group and China Everbright Structured Investment Holdings also participated in the privatization deal, but it’s unclear how large a stake they each own.

In June, Shenzhen-based Chinese venture firm Fortune Capital reportedly invested RMB300 million (US$48 million) in Focus Media Holding Limited for an undisclosed stake.

Founded in 2003, Focus Media operates advertising screens in office buildings and other public venues in over 100 cities in China. It recorded net profit of RMB2.5 billion in 2014, up from RMB1.3 billion in 2013.

China Expert network