MBK Said to Mull Singapore IPO for CNS After Sale Blocked

MBK Partners Ltd., a private equity firm formed by former Carlyle Group executives, is considering a Singapore initial public offering for Taiwan’s China Network Systems Co., said two people with knowledge of the matter.

Listing Taiwan’s largest cable television operator as a business trust is among options being discussed after a sale to Taiwan’s richest man was blocked this year, said the people, asking not to be identified as the deliberations are private.

MBK’s proposed sale of China Network, or CNS, to Want Want China Holdings Ltd. Chairman Tsai Eng Meng for $2.4 billion including debt failed this year as Taiwanese regulators ruled Want Want hadn’t fulfilled conditions for approval. Sellers from Taiwan, India and Hong Kong have completed business-trust IPOs in Singapore since early 2011 as they lured investors with high yields amid record-low interest rates.

“The subscriber base and average revenue per user tends to be quite stable so this makes a good candidate for someone like CNS to have a business trust,” said Jonathan Koh, an analyst at UOB Kay Hian in Singapore. “There is a track record of a Taiwanese pay-TV operator listed in Singapore, and that’s something they can rely on.”

Asian Pay Television Trust, owner of Taiwan’s third-largest cable television operator, listed in Singapore in May and is down 10 percent from its IPO price. Religare Health Trust, which raised S$511 million in its October IPO last year, is down 5 percent from its debut price, while Hutchison Port Holdings Trust, which raised $5.5 billion in March 2011, is down 24 percent.

Deal Conditions

CNS has more than 1.2 million subscribers in Taiwan, giving it a 20 percent market share according to MBK’s website.

MBK and a group led by Tsai initially agreed to a sale of CNS in 2010. After giving conditional approval for the deal in July of last year, Taiwan’s regulators said in February this year that the buyer hadn’t met its requirements. The conditions included converting a Want Want-owned channel to a non-news format and forming a supervisory board to ensure editorial independence.

Chao Yu-pei, an assistant to Tsai’s son Shao-chung, said an appeal has been filed with the Taiwanese cabinet and a ruling is expected in September.

“We still wish the deal can get approval,” Chao said by telephone today. Michael Kim, MBK’s founding partner, and Liu Chien-chih, a spokesman for CNS, did not reply to messages seeking comment on the IPO plan.


MBK Partners, formed in 2005 by five former Carlyle executives led by Kim, agreed in 2006 to buy 60 percent of CNS for NT$30.9 billion ($1 billion). The fund has $6.3 billion of assets under management and oversees 18 portfolio companies including Universal Studios Japan and New China Life Insurance Co., according to its website.

Asian Pay Television Trust raised S$1.39 billion ($1.1 billion) in its May IPO. The sale by the trust, which owns Taiwan Broadband Communications Co., was part of Macquarie International Infrastructure Fund’s planned shutdown. Asian Pay Television Trust offered a projected yield of 8.51 percent for 2014, according to its IPO prospectus.