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Visitors take photographs at Merlion Park as buildings in the central business district stand in the background in Singapore.

(bloomberg)

(Bloomberg) -- KKR & Co. is in advanced talks to sell Singapore’s MMI Holdings Ltd. to a Chinese investor group, people with knowledge of the matter said, as it pursues an exit more than a decade after buying the hard-drive component maker.

KKR is negotiating a sale of MMI, the oldest Asian investment listed in its portfolio, to a private equity fund affiliated with Beijing HBH Innovation Industry Fund, according to the people. A deal could value the company at around $700 million, including about $400 million of debt, the people said. An agreement could be reached as soon as next month, one of the people said, asking not to be identified because the information is private.

The talks come as cloud computing drives demand for storage solutions. In the past few years, MMI has bolstered profit through multiple acquisitions, increasing automation capabilities and acquiring proprietary technology and patent rights, the people said. Any transaction would add to the $29 billion of announced Chinese acquisitions in Singapore over the past 12 months, according to data compiled by Bloomberg.

Private equity firms typically aim to exit their investments after three to five years. KKR bought MMI in a 2007 deal valuing the company at about $650 million, the Bloomberg-compiled data show. It had planned to relist MMI on the Singapore stock exchange in 2015, before deciding to postpone the offering amid market volatility, people familiar with the matter said at the time. 

MMI makes and ships more than 26 million high-precision parts for computer hard disk drives weekly, according to its website. MMI has design centers and manufacturing facilities in China, Malaysia, Singapore and Thailand, the website shows. 

Representatives for KKR and MMI declined to comment, while the Chinese private equity fund couldn’t immediately be reached for comment.

New York-based KKR contributed about $250 million of equity to the initial purchase of MMI and expects to make a slight profit from the exit, according to one of the people. It has received about $150 million in dividends from MMI over the past three to four years, the person said. 

Other Singapore companies in KKR’s portfolio include Goodpack Ltd., a provider of bulk containers it acquired for S$1.4 billion ($1.1 billion) in 2014, and Mandala Energy Ltd., a Southeast Asia-focused oil and gas exploration and production firm founded in 2015. KKR sold Singapore-based Unisteel Technology International Ltd., which makes precision-engineered components, to SFS Group AG in 2012.

(Updates with volume of Chinese deals into Singapore in third paragraph.)

--With assistance from Jonathan Browning

To contact the reporters on this story: Cathy Chan in Hong Kong at kchan14@bloomberg.net, Joyce Koh in Singapore at jkoh38@bloomberg.net, Annie Lee in Hong Kong at olee42@bloomberg.net.

To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net, Marcus Wright at mwright115@bloomberg.net, Neha D'silva at ndsilva1@bloomberg.net, Timothy Sifert

©2018 Bloomberg L.P.

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