Hillhouse Capital to Bid for Thyssenkrupp Elevator Unit

Hillhouse Capital to Bid for Thyssenkrupp Elevator Unit

Elevator Unit

By Aaron Kirchfeld, Eyk Henning, and Manuel Baigorri November 18, 2019, 1:34 AM PST Updated on November 18, 2019, 11:49 AM PST

The Thyssenkrupp Elevator test tower in Rottweill, Germany.
The Thyssenkrupp Elevator test tower in Rottweill, Germany. Photographer: Krisztian Bocsi/Bloomberg

Hillhouse Capital, the Asian private equity firm started by Yale endowment alumnus Zhang Lei, is among the bidders for Thyssenkrupp AG’s elevator unit as competition heats up for the prized asset, people familiar with the matter said.

The Hong Kong-based investment firm made a non-binding offer this month, according to the people, who asked not to be identified because the information is private. Its bid valued the business at more than 15 billion euros ($17 billion), two of the people said. Hillhouse is competing against a number of other buyout firms and strategic bidders, a list that’s expected to be whittled down to a handful in the next few weeks, they said.

Hillhouse could seek to team up with other bidders and offer help expanding the business in the crucial Chinese market, two of the people said. It has expressed interest in partnering with Finnish elevator Kone Oyj, though so far the latter is reluctant, according to two of the people.

Representatives for Hillhouse, Thyssenkrupp and Kone declined to comment.

Hillhouse, which raised $10.6 billion for its third buyout fund last year, was started in 2005 with funding from Yale’s endowment. It’s known for its savvy in marrying consumer products with technology and backing promising startups early. Airbnb Inc. and Chinese internet giants Tencent Holdings Ltd. and JD.com Inc. are among the companies it has invested in

The firm has also been pushing into larger deals. Hillhouse was part of an investor group that agreed in 2017 to buy Singapore-based warehouse operator Global Logistic Properties Ltd. for S$16 billion ($12 billion), which was Asia’s biggest-ever private equity buyout at the time it was announced.

Ailing Thyssenkrupp is exploring a sale or an initial public offering of the elevator business, its most valuable unit, to boost its equity cushions and cash pile to fund a turnaround of the steel-to-automotive conglomerate. The German company is still debating whether to sell a majority or minority stake in its crown jewel, the people said.

Brazilian-American investment firm 3G Capital and a range of other suitors have placed indicative bids for the elevator unit recently, Bloomberg News reported last week.

Kone partnered with CVC Capital Partners to make a joint offer, while Blackstone Group Inc. submitted a bid with Carlyle Group LP and Canada Pension Plan Investment Board, people with knowledge of the matter said at the time. Brookfield Asset Management Inc. and a separate consortium of Advent International, Cinven and the Abu Dhabi Investment Authority lodged their own bids, according to the people.

The German government has been tightening its scrutiny on acquisitions by overseas investors in key sectors. It’s lowered the threshold for examining foreign takeovers and widened the scope of deals that can be reviewed following a public backlash over deals including Midea Group Co.’s purchase of robot maker Kuka AG in 2016.

In August last year, Chancellor Angela Merkel’s cabinet vetoed a Chinese deal for the first time, blocking the takeover of German machine tool manufacturer Leifeld Metal Spinning AG by Yantai Taihai Group. A German state-owned bank also bought 20% stake of 50Hertz Transmission GmbH, one of the country’s biggest electricity networks, on behalf of the government in a move that foiled a potential purchase by State Grid Corp. of China.

— With assistance by William Wilkes, and Niclas Rolander

Leave a Reply

Your email address will not be published. Required fields are marked *