Taking China Private: The Carlyle Group, Leveraged Buyouts and Financial Capitalism in Greater China

Abstract

AbstractThis article analyses the introduction of leveraged buyouts in China and Taiwan. It focuses on how leveraged buyout firms (foreign financial intermediaries) operate in institutional environments where the state and family blockholder groups are important owners and stakeholders in the private sector. The Carlyle Group’s acquisition of three companies – Xugong Group Construction Machinery; Advanced Semiconductor Engineering; and Ta Chong Bank – provide empirical case studies of stakeholder receptiveness and views on the value of Carlyle’s firm specific resources. We find that the ability of target firms to exploit the resource advantages brought by leveraged buyout firms requires a supportive institutional framework and willingness by intermediaries to adapt their strategies to a range of stakeholders’ claims.