Private equity firm PAG holds informal talks with potential buyers

Private equity firm PAG holds informal talks with potential buyers

HONG KONG Reuters -- Private equity firm PAG has held informal talks with a number of investors interested in AirPower Technologies, China's largest independent producer of industrial gases, three people familiar with the situation told Reuters.

They said that there was no certainty that the talks would result in a sale, as the potential buyers include Macquarie Infrastructure and Real Assets MIRA, one of the world's largest infrastructure investors.

Two sources said that PAG, which has been looking at a Hong Kong initial public offering for AirPower, has been targeting a $10 billion valuation for the company in that process.

AirPower is a company that PAG merged Yingde Gases with Shanghai Baosteel Gases Group this year.

Sources said AirPower filed for a Hong Kong IPO in August with the goal of raising $1 billion, but they said it has yet to decide if it will launch the offering this year.

One source said that the IPO option appears to be more viable than a sale as no obvious buyer has emerged for 100% of the business.

There were concerns about the Hong Kong stock market weighing on the IPO valuations and that a sale could give PAG a full exit, compared to a gradual selldown that would normally come with an IPO and follow-on shares sales.

Sources didn't say anything, as the information was confidential.

PAG said the information obtained by Reuters was not accurate, but did not elaborate further. A representative for AirPower didn't want to say anything.

A PAG exit from AirPower would be the firm's biggest cashing-out so far, as it would be a result of an IPO or a sale. PAG is aiming to raise $9 billion for what would be its largest buyout fund, led by veteran Chinese dealmaker Shan Weijian.

PAG bought a 42% stake in Yingde Gases, China's largest independent producer of industrial gases, in 2017 from its three co-founders for $616 million and later took it private. A year later, it won an auction for a 51% stake in Baosteel Gases from state-owned Baowu Steel and increased its holding to 65%, according to AirPower's IPO filing.