Asian private equity group closes in on $4B Ingram Micro investment

Asian private equity group closes in on $4B Ingram Micro investment

World's largest distributor in "advanced talks"

Credit: Ingram Micro

Ingram Micro is on the verge of selling a controlling stake to a consortium of investors led by Asian private equity group RRJ Capital, in a $4 billion deal.

That’s according to mounting media speculation claiming that the world’s largest distributor is in “advanced talks” with the party and could sell a majority stake in the business “in a few days”.

Ingram Micro is currently owned by HNA Group, following the completion of the Chinese conglomerate’s $6 billion acquisition of the US-based business almost three years ago.

As revealed by ARN at the time, the acquisition - completed in December 2016 - resulted in the publicly-traded HNA Group subsidiary, Tianjin Tianhai Investment Company, taking control of the distributor.

Fast forward to today and advanced talks are alleged to be underway with RRJ Capital, amid a global selling spree at HNA.

“Debt-laden airlines-to-finance conglomerate HNA has launched a series of asset sales including real estate and stakes in hotel groups over more than a year following China’s crackdown on aggressive dealmaking firms,” wrote Reuters.

A source close to Reuters said the investment group will “inject funds via an HNA convertible bond that will give it control of Ingram Micro”.

Meanwhile in May, Ingram Micro reported record revenues and profits during the 2018 fiscal year, driven by worldwide sales surpassing the $50 billion mark.

Revealed via a company filing, the distribution giant reported sales of $50.4 billion for the year ending 29 December 2018, representing an increase of $3.8 billion or eight per cent compared to the previous year.

Delving deeper, gross profit during the financial year increased by $230 million to $3.2 billion, with gross margin of 6.30 per cent. The numbers surpassed results in 2017, which totalled $46.7 billion in sales, alongside a gross profit of $2.9 billion and gross margin of 6.32 per cent.

News that Ingram Micro is close to being sold should come as no surprise to the channel however, with HNA confirming in December that preliminary talks were underway with an interested party.

At the time, and according to The Wall Street Journal, the interested party was cited as private equity firm Apollo Global management LLC, for a rumoured price tag of $7.5 billion. But that deal failed to materialise, paving the way for RRJ Capital to take charge of the bidding process.

Headquartered in Hong Kong, RRJ Capital is an Asian investment firm focusing on private equity investments primarily in China and Southeast Asia markets.

The business - which also operates out of Singapore - has close to $11 billion worth of assets under management, with expertise in growth capital and state-owned enterprises investments.

Should the buyout go through, the deal would continue the trend of increased M&A activity among distributors both globally and locally, highlighted by transactions involving Tech Data and AvnetSynnex and Westcon-Comstor and Arrow Electronics and Distribution Central.

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