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Based in China, GOME Electrical Appliances is a top electronics retailer. However, the firm has been under a cloud lately. After all, GOME's founder, Huang Guangyu, is under investigation for alleged financial fraud.
But, such things aren't a deterrent for Bain Capital. As expected, this private equity operator announced a deal to buy about $233 million in convertible bonds in GOME. What's more, the retailer plans to sell $214 million in shares, with a discount of 40%.
No doubt, this will be a nice boost of confidence (Ernst & Young indicated that there were no material deficiencies). In fact, with the infusion of cash, GOME will likely undergo an aggressive growth path (the retailer already has 859 locations).
Also, Bain should provide some helpful strategic guidance. For the most part, GOME needs some retooling of its operations, such as closing down some stores.
In other words, the GOME deal represents a great opportunity for Bain, which is getting a growth-asset on fairly attractive terms.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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