LK Technology Holdings, a die casting machine supplier to mainland manufacturers, has sold a HK$400 million stake to FountainVest, a China-focused buyout house backed by Singapore's Temasek Holdings.
As the machines make everything from cars to mobile phones, the investment in LK Technology was a bet on the Beijing government's efforts to boost domestic consumption, said Frank Tang, a FountainVest partner.
Valuations of Chinese machinery companies were also expected to rise, Tang said, as the government wanted mainland factories to stop importing technology from the West and buy locally.
'Explicit emphasis on upgrading the machinery sector' in Beijing's 12th five-year plan to 2015 would benefit LK Technology, he said.
'A lot of high-end machinery is imported, but the domestic industry is growing up,' he said.
Growth in mainland car sales was another reason FountainVest had put money into LK Technology, as a supplier to BYD, he said.
