HAO Capital has fully exited Chinese electronic payment systems provider Pax Technology, selling its remaining 7.6% stake in the Hong Kong-listed company for $44 million through a block trade. The investment has generated a gross multiple of 4.7x.
The realized proceeds amount to $142 million on an original investment of $30 million. Hao committed $10 million in Series A funding to Pax in 2007 and followed up with another $20 million two years later, for an overall stake of 40%. The capital came from the private equity firm’s first two funds.
When Pax went public in Hong Kong in late 2010, raising around HK$1 billion ($129 million), Hao made a partial exit. This, plus the dilution effect of newly issued shares in the IPO, saw the private equity firm’s stake in the business fall to 22.8%.
In January, Hao sold a 15.1% stake in the business for around $78 million through another block trade.
Pax provides electronic fund transfer point-of-sale (EFT-POS) terminals used for processing credit and debit card payments. Major customers include China UnionPay, Bank of China, Agricultural Bank of China, Bank of Communications and China Mobile.
China was estimated to have four EFT-POS terminals per 1,000 people in 2011, compared to 23 terminals per 1,000 people in mature markets.
The company posted a net profit of HK$182.9 million in 2012, up 1% year-on-year, while revenues increased by 19% to HK$1.31 billion. In 2007, the year Hao made its first investment, net profit and revenues were HK$64.2 million and HK$323.1 million, respectively.
Founded in 2005, HAO Capital has approximately $500 million in assets under management across its two funds. It typically invests $20-50 million per transaction, favoring the consumer, healthcare and light industrial sectors.
Asian Venture Capital Journal