PAG fields interest for Chinese industrial gases firm AirPower -sources

December 7, 2021 3:43 AM EST

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By Julie Zhu and Kane Wu

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

Potential buyers include Macquarie Infrastructure and Real Assets (MIRA), one of the world's largest infrastructure investors, they said, adding there was no certainty that the talks would result in a sale.

Hong Kong-based PAG, which has also been exploring a Hong Kong initial public offering for AirPower, has been targeting a $10 billion valuation for the company in that process, said two sources.

AirPower is the company formed after PAG merged Yingde Gases with Shanghai Baosteel Gases Group this year.

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

The IPO option appears more viable than a sale as no obvious buyer has emerged at this point for 100% of the business, said one of the sources.

A sale, however, could give PAG a full exit, compared to a gradual selldown that would normally come with an IPO and follow-on shares sales, said two sources, adding there were also concerns about volatility in the Hong Kong stock market weighing on IPO valuations.

The sources declined to be named as the information was confidential.

PAG said the information obtained by Reuters was not accurate but did not elaborate further. MIRA did not immediately respond to a Reuters request for comment. A representative for AirPower declined to comment.

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

PAG bought a 42% stake in Yingde Gases, China's largest independent producer of industrial gases, in 2017 from its three co-founders for some $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 later increased its holding to 65%, according to AirPower's IPO filing.

(Reporting by Julie Zhu and Kane Wu; Editing by Sumeet Chatterjee and Edwina Gibbs)

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