PE Firms To Buy 10% of UnionPay

HONG KONG (Reuters) – Three private equity firms have agreed to buy a combined about 10 percent stake of a flagship unit of China UnionPay, as the country’s monopoly card payments service provider aims to go public next year, sources with direct knowledge of the deal said on Friday.

CITIC Private Equity, an investment arm of China’s top brokerage CITIC Securities (600030.SS), V-Stone Investments, the private equity arm of Shanghai-listed men’s fashion maker Youngor Group are among the buyers for the stake in China UnionPay Merchants Service Co Ltd, said the sources.

The third buyer is a local investor and they have agreed to pay about 800 million yuan ($117.1 million) for a total of 10 percent of old shares of the China UnionPay unit, said the sources.

China UnionPay, considered the homegrown equivalent of Visa Inc (V.N) or MasterCard Inc (MA.N), controls the country’s bank payments system, including payment services for debit and credit card, and automatic teller machines (ATMs) across the vast nation.

The shares bought by the three private equity investors were originally held by employees of China UnionPay. The firm is required by regulators to sell off “employee stock” to improve its shareholding structure in preparation for an IPO next year, said the sources.

The sources declined to be identified before an official announcement is made. China UnionPay declined to comment.

Most Chinese banks issue local currency yuan-denominated credit cards, carrying a China UnionPay logo.

In China, some banks also issue dual currency, usually yuan and U.S. dollar-denominated, credit cards with both China UnionPay and MasterCard or Visa logos to allow Chinese card holders to make transactions more easily when traveling abroad. ($1=6.830 Yuan)

By George Chen (Editing by Jacqueline Wong)