Mysterious Gome'S Second Largest Shareholder, &Nbsp; Who Is Bain?

On the evening of September 16th, Bain Capital, the second largest shareholder of Gome (00493, HK), ended its ambiguous attitude toward Gome's largest shareholders and management, and finally completed the "debt to equity swap": equity conversion with 1 billion 590 million yuan in debt investment, thus holding 9.98% of Gome.

The direct result is that the stake of the Wong Kwong Yu side has been diluted by 3 percentage points at the critical moment of struggle.

From June last year, the private equity fund from the United States first appeared in Gome and finally sold it.

Bain founder:

"Mature business is more in line with Bain's appetite"

"Bain Capital was founded in 1984 to provide private equity investments and additional acquisitions for more than 250 companies across the globe," which is a statement on the website of Bain.

Unlike Morgan Stanley, Goldman Sachs and other investment banks, Bain Capital is born out of Bain consulting, a consulting firm, and is well-known for its industry and McKinsey and Boston international consulting company.

Bain Capital, founded in 1984, is a new company built by Dmytro M Ni Willard Mitt Romney.

Romney, 63, is a powerful figure in the US political arena. He is the seventieth governor of Massachusetts and served as chairman of the Organizing Committee of the Salt Lake City Winter Olympic Games.

His most famous event was the 2008 presidential election.

Because of its good reputation in the Republican Party, Romney is regarded as one of the hottest candidates in the US presidential election in 2012.

Although Romney has been away from Bain Capital for many years, it has developed a distinctive style for Bain Capital. By virtue of its unique "Bain way", it has increased the value of its assets from US $30 million to US $9 billion.

In his autobiography "turn", Romney himself reported that he had been in danger many times to turn the business that was on the verge of collapse into a deficit.

In his autobiography, Romney also believes that Bain Capital is especially good at acquiring buyout financing through leveraged buy-out, and absolute control of investment companies has become a prerequisite for Bain Capital Investment.

"Leveraged buy-out must be precise, so I will not invest in newly established enterprises. The success of those enterprises often depends on things that I can't control. Mature enterprises are more in line with Bain's appetite."

Romney accepted the US media interview that after leveraged buy-out, the Bain Capital, which controls the absolute control rights of the acquired companies, will be more likely to further develop their customary "short-term stimulus value-added scheme".

Bain Capital's participation in a series of investments, such as toy fight, Warner Music, Burger King and other companies, are absolute holdings.

Bain Capital's No. 1 managing director, Zhu Jia, previously said publicly that "we are not passive investors. We will give companies support on many issues outside the fund".

At present, Bain Capital Management funds exceed $65 billion, involving private equity, venture capital funds, listed equity hedge funds and leveraged debt asset management.

Bain executives are also very optimistic about the Chinese market.

Reporters learned that Bain currently accounts for 6 of the 13 investment projects in Asia.

Zhu Jia: "China M & a magnate"

"The purpose of a company's debt to equity swap is not to stand in line, nor to fight for one side."

In September 15th, Mr. Zhu, director general of Bain Capital, said.

Earlier, the rumors about Zhu Jia and Chen Xiao's personal relations were very good, and Zhu Jia's needle crossed.

And his own experience is legendary.

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Like Chen Xiao, he was born in Shanghai. In 1992, he graduated from the Cornell University Law Department of the Ivy League.

Before entering the investment bank, he worked in a law firm in New York.

After that, Zhu walked step by step.

At the beginning of 1995, he joined Morgan Stanley's New York headquarters for issuing major pactions such as bond stocks, mergers and acquisitions and reorganization.

Thanks to his excellent performance and his birth background in China, he was pferred to Hongkong after heavy responsibilities and became the soul of Morgan Stanley's development of China's financing market.

Under the leadership of Zhu Jia, Morgan Stanley's market performance in China has gone all the way, and Zhu has become the position of Morgan Stanley Investment Bank of China.

Since he took charge of the Chinese region in December 2004, he has begun to co-ordinate Morgan Stanley's other business in China, such as bond business, direct investment and QFII qualified foreign institutional investors.

Many IPO projects in China's large enterprises with billions of yuan have their shape.

The Wall Street journal has written a special introduction to Chinese investment experts represented by Zhu Jia, Fang Fenglei (investment partner of Magnolia officinalis), and Liu Erfei, President of the United States bank of China (Merrill Lynch, Merrill Lynch, China). They say they have overseas gifted backgrounds, all of them are smart and capable, politically sensitive and have the best ability to match pactions. They have become the targets of the Wall Street firm scrambling to excavate, and their annual salaries are as high as $10 million.

Most of the new stars of Chinese investment banks returned home after studying in the United States in 1980s. Now they play a pivotal role in a series of huge cross-border pactions in mainland China. They can be unimpeded by investment targets, management departments and capital markets. They are "rain maker".

The most popular among the industry is his overseas listing of China Construction Bank as Morgan Stanley China CEO, which is described by New York Times as "The most powerful deal maker in China" (China M & a magnate).

In addition, he also provided consultant for the strategic investors before the construction bank went public, and contributed to the US bank's 2 billion 500 million US dollar and Singapore's Temasek $1 billion 400 million investment.

Hongkong media called Zhu Jia "the God of money" and "China Boss" because the anecdotal view was that the first emperor of Hongkong working emperor in 2006 was the king.

In January 2006, when Zhu left his 11 year old Morgan Stanley, public opinion was in an uproar.

According to Zhu's own view, "this departure has nothing to do with Morgan Stanley's office politics and factional struggle. This is my choice. I don't want to connect with others."

Morgan, who left Stanley, chose Bain Capital, when Bain Capital was planning to set up a special acquisition fund in Asia.

Zhu is a rare talent for Bain Capital, which is interested in opening up the Asian market.

Will Bain join Gome's second largest shareholder?

And the same as Bain Capital, the same fate and story between Zhu and Gome and Chen Xiao.

In August 23rd, Chen Xiao set forth the reason for choosing Bain Capital at the Gome interim performance conference held in Hongkong: "group management has extensive contacts with investors such as (Hua Ping), Bain, KKR, Blackstone, TBG, Carlyle, etc. these investors, without exception, propose to dilute the investment plan of large shareholders in order to ensure the safety of investment.

After nearly half a year's negotiations, the group finally chose Bain as an investor to issue 1 billion 592 million convertible bonds to Bain and offer a plan to all shareholders.

This solution basically solved the demand for funds at that time, and at the same time, the dilution degree of the original shareholders was the smallest. After the completion of the financing, all management were very pleased, and the capital market was also encouraged.

After the resumption of Gome, the sharp rise in share prices is the best proof. "

However, one of the difficult details to be ignored is that as early as 2005, when Morgan Stanley was the underwriter of the Morgan Stanley in China, Morgan Stanley began to contact with Yongle Electric's founder, Chen Xiao, the underwriter of Yongle Hongkong.

"Since then, we have been in touch."

Zhu did not shy away from this.

In November 23, 2008, Wong Kwong Yu was taken away by the Beijing Public Security Bureau, and Chen Xiao acted as the acting chairman of Gome's board of directors.

At that time, Gome's capital chain was in serious condition, and Chen Xiao, who had pferred to Bain Capital, immediately found him.

"The formal dialogue began in December 2008."

Zhu recalled later, but it also pointed out that despite the initial contact with Chen Xiao, Gome negotiators turned to Gome President Wang Junzhou and vice president Wei Qiuli, all two of whom were old Wong Kwong Yu.

In June 22, 2009, Bain Capital finally won.

Gome signed a cooperation agreement with Bain, and Bain subscribed the convertible bonds issued by Gome in 2016 for RMB 1 billion 590 million yuan, settling at about 233 million US dollars (equivalent to about HK $1 billion 804 million).

Bain thus became the second largest shareholder of Gome.

In January 2010, the The Asset, the world's leading Asian financial journal, issued the results of the "2009 3A Award" award for the best Asian financial institutions and companies. Gome successfully won the Bain Capital Investment and successfully issued convertible bonds last year, reversing the company's financial position in one fell swoop, and was elected the best paction in mainland China with a total of $777 million in financing pactions.

Obviously, the investment in Gome has broken the "absolute control" practice before Bain Capital.

However, the final confrontation has not yet arrived. The final result of the war between the United States and the United States has not yet appeared, and there is still room for all imagination.