Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Pressured equity: Asia buyout firms struggle with COVID-hit portfolio

Stock Markets Aug 18, 2020 03:20AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters.

By Kane Wu and Anshuman Daga

HONG KONG/SINGAPORE (Reuters) - Baring Private Equity Asia and CITIC Capital have sold the China business of Wall Street English (WSE) at a deep discount in just over two years since acquiring it as the COVID-19 pandemic crippled the global language tutoring group, sources told Reuters.

Baring confirmed the sale of WSE China, which at the time of the purchase showcased strong sales and operating profit growth in the world's second-largest economy, to its original founder but gave no details.

Separately, U.S. buyout firm Bain Capital-owned Trans Maldivian Airways is struggling to repay a $305-million acquisition loan, as the virus outbreak halts tourism, other sources said.

Bain bought the world's largest sea plane operator, currently grappling with grounded planes and almost zero revenue, for over $500 million in 2017, with two partners. Bain has been given an August-end deadline by lenders to settle the loan, they said.

Bain declined to comment. CITIC Capital referred the query to Baring. WSE and TMA did not immediately respond to a query for comment.

The sources declined to be named as they were not authorised to speak to the media.

Buyout firms across Asia are scrambling to pare their exposure to COVID-hit companies, putting the brakes on new fundraising which dropped to an eight-year low in the first half.

The pandemic poses the most severe challenges faced by PE firms in the region since the global financial crisis as company valuations take a beating. This has impeded their exit prospects while pushing up capital costs, potentially spelling weaker returns if not outright losses.

Luke Pais, head of ASEAN private equity at EY, said PE firms were very much focused on portfolio liquidity – 'the burning' problem in the initial months of the pandemic.

"The approach has been to try and take out unnecessary costs as much as possible, draw down all credit lines and optimise cash conservation until things pick up," he said, pointing to PE exits likely to be pushed back by 12-18 months or longer.

Asia-focussed PE fundraising slumped 44% year-on-year to $13 billion in the first quarter of 2020 to the lowest since the third quarter of 2013. Funding rose to $18 billion in the second quarter but was down 40% from a year earlier, Preqin data shows.


In order to avoid selling assets during a coronavirus-induced economic downturn, PE firms in the U.S. have also sought to recapitalize their portfolio companies mostly by drawing down bank revolving credit facilities and cutting costs.

The education, travel and retail sectors are among the worst hit but investment in others in Asia is picking up.

In retail, Chinese buyout firm Hony Capital has decided to cease control of UK's PizzaExpress, which it bought for 900 million pounds ($1.2 billion) in 2014, to creditors in a debt-for-equity swap, sources said.

Hony, which may keep the Chinese business of Pizza Express, declined comment. PizzaExpress also declined to comment.

With a record $388 billion war chest, some PE firms are, however, seeking investments in the technology, internet and healthcare sectors, as demand for those services grows.

"That's the whole thesis of what could be benefiting or what could be actually coming out of this in a positive trend," said Kiki Yang, co-head of Asia Pacific PE practice at consulting firm Bain & Co.

Pressured equity: Asia buyout firms struggle with COVID-hit portfolio

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email