Bloomberg reports that Gome Electrical Appliances Holdings Ltd. may sell up to 20% of the company to Bain Capital. The asking price is said to be in the neighborhood of $500 million. KKR & Co. and Warburg Pincus are also said to be interested in the stake in Gome.
With more than 800 stores in 160 cities, Gome is China's second-largest electronics retailer, which makes it a tempting target for investors looking for alternatives to recession-constrained businesses in the United States, Europe, and developed markets in Asia.
Selling the stake will help Gome reduce debt and boost reserves. Gome said it had cash and cash equivalents of 3 billion yuan at the end of last year, less than half the amount in the previous year. The final size of any transaction could change, depending on whether further capital was needed.
Though Bain is the leading contender thus far, Gome has yet to formally select a preferred buyer.
