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Carlyle, Partners Group plot $203m IPO

China Forestry, in which Carlyle has a 16.5% stake and Partners Group a 7% stake, will next month list on the Hong Kong Stock Exchange.

China Forestry Holdings Group, a Chinese forestry plantation operator backed by private equity firms The Carlyle Group and Partners Group, has published a draft prospectus ahead of a listing on the Hong Kong Stock Exchange.

A market source said the company is looking to raise up to $203 million through the IPO. Carlyle declined to comment. Partners Group was not available for comment at press time.

China Forestry is one of the largest private naturally regenerated and plantation forest operators in China in terms of coverage area of owned forest rights. In the six months ended 30 June, the company booked a profit of RMB432 million ($63 million; €42 million).

The company plans to offer 750 million shares priced between HK$1.60 ($0.21; €0.14) and HK$2.10 each, according to Reuters. Pricing will be decided on 24 November and the company is to list on 3 December. An overallotment option allows the size of the fresh issue to be upped by 15 percent to raise $232 million, Dow Jones reported.

Carlyle first acquired a roughly 12.5 percent stake in China Forestry for around $40 million in early 2008, according to the draft prospectus. This investment gave Xiao Feng, a Beijing-based Carlyle managing director, a seat on the company’s board.

Subsequently in June 2009, Carlyle acquired an additional 4 percent stake in the company for about $15 million. In the same month, Partners Group acquired a stake of around 7 percent in China Forestry for approximately $30 million, the draft prospectus noted.

According to Carlyle’s website, it made the investment out of Carlyle Asia Growth Partners III, which closed on $680 million in 2005.

In June, Carlyle Asia Growth Partners IV closed on $1.04 billion. Presently, Carlyle is in the market with its third Asian buyout fund, having raised a little over $2 billion towards its reported target of about $3 billion. It is also raising its second Asian real estate fund, which is targeting $1 billion.

Partners Group makes direct private equity investments through Partners Group Direct Investments 2009. In December 2008, the Swiss firm closed its second Asia-Pacific “programme”, which comprises a series of vehicles that will invest in primary funds, secondary transactions and partner on direct investments, on more than $1.1 billion. Its first vehicle dedicated to the region closed on $378 million in March 2006 and is now fully invested.