Pincus pays US$150m for stake in GOME
(Agencies)
Updated: 2006-02-06 16:16

GOME Electrical Appliances Holding Ltd. and Warburg Pincus unveiled a deal Thursday in which the private equity firm will pay US$150 million for the right to buy almost a 10th of China's top electronics retail chain.

Under the agreement, GOME will sell convertible bonds and warrants to Warburg Pincus to bankroll an aggressive expansion aimed at staving off homegrown rivals such as Paradise Electronics Retail Ltd., and potential foreign entrants such as Best Buy Inc.

Warburg Pincus, with about US$12 billion under management and another US$7 billion available for investment, has ploughed more than US$700 million into China since 1995 in sectors ranging from real estate to retail — part of a surge of private equity investment into the country.

GOME is eager to expand its share of the hotly contested US$55 billion electronics retail market, where scale is crucial for cost savings, to as much as 15 percent by 2008.

GOME and its parent plan to open 200 outlets this year, on top of more than 400 across China now. The listed company said in December it planned to open about 100 stores in 2006.