Gome shares surge after Bain investment

Shares in scandal-hit electronics retailer Gome Electrical Appliances Holdings rose 69% on Tuesday after the firm announced an investment by private equity firm Bain Capital, Bloomberg reported. Shares in China’s second-largest electronics retailer closed yesterday at HK$1.89 (US$0.24) on its first day of trading after a seven-month suspension following the detention of its founder Huang Guangyu for “economic crimes.” Gome announced that it would sell US$233 million in convertible bonds to a Bain affiliate and US$214 million in shares to stockholders. Analysts said the capital raising was evidence that the worst was over for Gome, which had seen its ratio of debt to equity quadruple to 143% in 2008. Gome’s chief executive Chen Xiao said that Gome would slow new store openings this year, and focus on opening “mega stores.”