Golden Brick Capital is emerging as a major private equity investor in China’s technology sector. With large stakes in companies like Qihoo 360 and Ku6 Media, Golden Brick is at the forefront of China’s wave of privatization of US-listed Chinese companies. This article will analyze Golden Brick’s investment strategy and major deals, providing insights into the world of Chinese private equity investment.
Golden Brick’s rise through Chinese tech investments
Founded in 2009, Golden Brick has grown rapidly by investing in Chinese technology companies. It bought a 20% stake in Qihoo 360 ahead of its 2011 IPO and has steadily increased its holdings. Golden Brick was part of the buyer group that took Qihoo 360 private in 2015 at a valuation of $9.3 billion. The privatization enabled Qihoo 360 to relist on the Shanghai market. Golden Brick also participated in the privatization of Ku6 Media in 2016. Through these and other tech deals, it has gained deep expertise in the sector.
Private equity model enables long-term growth strategy
As a private equity firm, Golden Brick can take a long-term approach to nurturing its portfolio companies. Unlike venture capital, private equity allows for more patient capital that doesn’t require an IPO or acquisition exit within a few years. This enables more strategic thinking about how to build corporate value over time. With majority stakes and board seats, Golden Brick has been able to work closely with management to guide the growth trajectory.
Privatization wave creates opportunities
The recent trend of privatizations has opened up a new avenue for private equity in China. Many US-listed Chinese companies have been seeking to privatize and relist domestically. This allows them to tap into China’s active capital markets closer to home. For investors like Golden Brick, it’s a chance to take companies private at discounted valuations compared to their earlier IPOs. The privatization wave has been spurred by market volatility and various challenges facing Chinese firms abroad.
Connections with Chinese institutions smooth deals
As a relatively young firm, Golden Brick relies heavily on partnerships with Chinese institutions to undertake mega-deals. For example, the Qihoo privatization was done in conjunction with Chinese investment bank CITIC Securities. Having strong relationships with banks, regulators, and other players helps navigate China’s complex business environment. Connections also aid in securing financing for leveraged buyouts.
Through key investments in Chinese tech companies, Golden Brick Capital has established itself as a major private equity player. Its long-term investment horizon and connections with Chinese institutions give it an edge in the current wave of privatizations. As more US-listed Chinese firms return home, Golden Brick is poised to capitalize through buyouts and restructurings.