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American private equity group acquires 10% stake of Brilliance Auto
Shanghai. March 12 (Gasgoo.com) –American private equity group Rocket Capital Investment Group and Red McCombs have signed a memorandum of understanding with Chinese automaker Brilliance Automotive Holdings to acquire 10%-15% stakes of the latter, China Securities Journal reported today.
Under the agreement, Rocket Capital Investment Group's owner Les Alexander and Red McCombs, a founder of Clear Channel Communications, will pay around US$100 million to acquire these stakes. Rocket Capital will also send a non-executive director to Brilliance's board.
Headquartered in Houston, USA, Rocket Capital is a leading private investment platform founded by NBA Houston Rockets owner Mr. Leslie L. Alexander. Mr. Alexander also owns one of the largest bond trading private accounts on Wall Street.
The new investment will be used to fund Brilliance's research and development programs on new sedan models and BMW models. The investment will also be used to fund a joint venture program, according to the MOU.
"Both sides want to take a controlling share of the proposed joint venture," said Wu Xiao An, president of Brilliance Auto. "It may finally come out as a 50-50 joint venture."
The joint venture will concentrate on the development of after-market business, according to the China Securities Journal report. "The profit margin of the after-market business is much bigger than that of the automobile manufacturing business." Wu said.
"Car exports are an important part of business operation," Wu said. "By the middle of next year, we will be able to clear all legal hurdles in the United States and export the first batch of Brilliance's Zhonghua brand vehicles to that market."
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