Hony Capital - US$100 million acquisition of a minority interest in a Madagascan iron ore mining project

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Slaughter and May advised Hony Capital, the private equity arm of Legend Holdings (the parent of Lenovo Group), on its acquisition for up to US$100 million of a 15% indirect interest in the Soalala iron ore mining project in Madagascar.

Hony Capital has agreed to acquire, through one of its funds (Hony Capital Fund 2008), a 75% interest in Kam Hing International Limited (KHIL) from Kam Hing International Holdings Limited (KHIHL) for an initial payment of US$30 million and a post-completion adjustment of up to US$70 million. KHIL holds an indirect 20% interest in the Soalala iron ore mining project in Madagascar. In addition, Hony Capital has agreed to provide a loan facility to KHIHL of US$10 million.

Founded in 2003, Hony Capital is a China-focused middle-market private equity firm which is sponsored by Legend Holdings. With over US$3 billion in assets under management across five funds, Hony Capital primarily focuses on the construction materials, pharmaceuticals & healthcare, construction machinery and consumer & retail industries, with a secondary focus on the media & entertainment, financial services and energy & resources industries.

The transaction was announced on 31 January 2011 and constitutes a major transaction for KHIHL under the Listing Rules.

Benita Yu (partner), Roger Cheng (associate), Jing Chen (associate), Michelle Chan (associate)