Bain and KKR Shortlisted As Huawei Investors

It has been reported that Bain Capital and Kohlberg Kravis Roberts are amongst the short list to take an equity stake in Huawei's mobile phones division. The company is looking to offload a stake in the company, party to increase its profile as a legitimate business when seeking overseas investments.

The company was recently thwarted in its attempt to take a minority stake in US based 3Com following a backlash from US politicians over company founder and president Ren Zhengfei's military background. It is thought that an investment by a blue-chip company will make it easier for the parent firm to then accelerate its overseas expansion plans.

The Financial Times, citing people close to the negotiations said that Silver Lake and a private equity arm of Goldman Sachs are also through to the second stage.

Huawei plans to sell off its mobile phone, laptop, wireless data-card and home router businesses - retaining its network infrastructure division. The divestment of the handset division into a separate company could well fuel speculation about industry consolidation - particularly as Motorola's handset division is being spun off into a separate company at the moment.

Huawei had been looking to sell a 49% stake in the company, but is understood to be interested in selling a majority stake if the price is suitable.

According to people who have seen the information memorandum produced by Morgan Stanley, the adviser hired by Huawei, the unit is this year expected to report revenues of $3.5 billion and produce net profits of about $400 million.

Vodafone and AT&T have also been named as possible bidders for the stake - although it does not seem that they may have tendered a formal offer before the deadline.

The company was recently reported as aiming to increase its handset production to 50 million units per year. Huawei currently outsources its handset manufacturing to Thailand based Cal-Comp Electronics and Singapore headquartered Flextronics.

On the web: Financial Times

Posted to the site on 3rd July 2008