Beijing, The Bear Stearns Companies Inc. a leading financial services firm, and Eagle Investment Group a Chinese investment firm, today announced the formation of a strategic investment alliance focusing on opportunities in the retail sector in China in conjunction with Bear Stearns’ private equity arm, Bear Stearns Merchant Banking.
BSMB is widely known for its experience in investing in successful retail and consumer brands throughout the U.S. Mr. Wong Kwong Yu, the founder of GOME Electrical Group, which is the largest electronics retailer in China, is the chairman of Eagle. Through this alliance, Bear Stearns and Eagle will pledge $250 million to invest together, for a total co-investment platform of $500 million.
Eagle's chairman, Wong Kwong Yu, said the alliance would focus on helping promising Chinese retail companies to develop, expand and enter international markets.
Wong, one of China's richest men, said the rapid development of the country's economy and rising incomes had placed retail business as a key growth engine in the Chinese economy.But there is still plenty of room for development, especially in second-tier cities and the vast rural market.
"We will focus on well-branded and promising Chinese retail businesses, and we will also bring in capital management experience and help develop their international competitiveness. There is still plenty of room for improvement in China's retail industry, especially in second tier cities and the rural market," Wong told a press conference in Beijing.
"No investments would be made in GOME, which is listed in Hong Kong and is already actively expanding.The co-investment by Eagle and Bear Stearns is exclusively for retail sectors, other than home electrical appliances," Wong added.
“Bear Stearns fully appreciates the opportunities that exist in this region,” commented Donald Tang, Vice Chairman of Bear, Stearns Co. & Inc. “In bringing together the investing acumen of Bear Stearns Merchant Banking, and vast resources and stellar reputation on Wall Street of Bear Stearns, and the insight and capabilities of Mr. Wong, we are creating an entrepreneurial partnership that is typical of Bear Stearns. China has a growing and dynamic economy; we are convinced there is a vast opportunity for private equity transactions.”
Gwyneth Ketterer, chief operating officer of Bear Stearns Merchant Banking, said," When we look at the market in China today, and we were looking more closely at what we think is the middle market, we see attractive opportunities especially in the 25 to 100 mln usd equity investment size."
"Therefore an allocation of 500 mln usd in capital seemed reasonable to get our alliance started.We are confident that each of us has the resources to provide more capital given the wealth of opportunities…and we hope that in the coming months we will be able to leverage that capital with potentially institutional capital as well," she said.
Retailers in China today are working quickly to adopt international standards and strengthen their businesses. Investments made through the new alliance will help support China’s rapidly maturing and expanding retail sector.