Zindart's Sale of Hua Yang a Growth Move
Asian Venture Capital Journal
2004-06-14

ChinaVest investee Zindart Ltd has sold Hua Yang Holdings Company Ltd for approximately $24 million, with Latitude Capital Group advising Zindart on the sale.

Zindart, as an OEM, designs and manufactures plastic and die-cast products for both its own brands and other companies. Until the sale of Hua Yang, Zindart had operated Zindart Manufacturing, classic toy car company Corgi, and Hua Yang, which specialized in printing and packaging. Zindart acquired Hua Yang in 1998 and Corgi Classics Ltd in 1999.

Zindart's new direction and strategy is to sell off non-core assets in order to build up Corgi in the US, said Ken Fowler, CEO of Zindart, as Hua Yang had had little synergy with the rest of the group.

Fowler explained that Corgi's current major market is in the UK, and the Hua Yang sale would produce the capital needed to expand Corgi to the US. Meanwhile, Zindart also will attempt to move up the value chain. Fowler also pointed out that with the sale, Zindart and Corgi will move closer together, as their previous relation was not as close as expected due to certain banking issues.

Zindart's clients include Hallmark and Mattel. ChinaVest invested in the company in the early 1990s, and owns 23% of its shares. Zindart went IPO in 1997.

"The Number One focus right now is the growth of Corgi in the US," Fowler told AVCJ.

Frank Au, Managing Director of Latitude Capital Group, explained: "We believe a major theme going forward will be for Asian/China manufacturers to move up the value chain in terms of focusing on higher-value-added European and US-branded business, and on owning and managing branded products versus just being an OEM supplier. As Asian/China manufacturers get more successful, they are less and less willing to be just the no-name manufacturer behind the scenes, but want to acquire technology and the brands that they have historically serviced."

"The sale of Zindart's OEM printing & packaging business is a major step in freeing up capital for them to build out their European and US-branded business, which is already well underway," added Au.

By SY