PE-Backed Focus Media Finds New Shell Company For Back Door Listing

Shanghai-based digital media and display advertising firm Focus Media Holdings Limited has terminated a planned back door listing via a reverse merger with Shenzhen-listed Jiangsu Hongda New Material Co., Ltd., according to a securities filing.

At the same time, Shenzhen-listed computers and accessories maker Hedy Holding Co., Ltd. says it has agreed to a reverse merger deal with Focus Media, which will facilitate the outdoor advertising firm to list on the Shenzhen Stock Exchange.

Focus Media is valued at RMB45.7 billion (US$7.2 billion) in the deal, around two times the valuation when the company was taken private two years ago.

Focus Media announced its back door listing plans in May with the Yangzhou city, Jiangsu Province-based rubber producer and distributor, Hongda New Material. A month later, Hongda revealed that its chairman Zhu Dehong had been investigated for securities law violations.

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. Focus Media was valued at US$3.7 billion in the deal.

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