June 18 (Reuters) – Baring Asia Private Equity, with $5 billion in assets under management, has a reputation as one of the savviest investors in China.
But the Hong Kong-based firm is now sitting on an $43 million paper loss from a $57 million investment in New York Stock Exchange-listed Ambow Education Holdings Ltd., the latest example of how even the smartest money managers continue to get trapped in risky Chinese investments.
A Cayman Islands court ordered Ambow into provisional liquidation earlier this month.
Court-appointed partners of KPMG, the global consultancy, arrived at Ambow’s Beijing offices on June 13 to take over management and complete an 11-month investigation into allegations of sham transactions and kickbacks at the schools and training firm.
Ambow called the allegations “implausible” in a June 3 memorandum filed with the U.S. District Court for the Central District of California in response to a class-action lawsuit.
The setback for Baring comes amid signs of a renewal of interest in Chinese firms raising money on U.S. markets following a deal in May to give U.S. regulators access to Chinese companies’ audit documents.
Baring’s aborted bid – it made a $108 million offer for Ambow in March only to withdraw it 11 days later — also highlights the potential hazards of so-called “take private” deals that have become popular with private equity firms.
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Ambow setback teaches Baring a lesson in China investing
