PE takes stake in China’s Leyou
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US private equity firm Warburg Pincus has signed on to buy a majority stake in Beijing baby products retailer Leyou, according to a report.
Warburg’s acquisition – valued at between US$200-400 million, is a brand with a 580-store strong network of self-operated and franchised outlets operating in 150 cities. The deal was handled by investment bank BDA Partners.
The revoking of China’s One Child Policy has prompted many investors to expect a Chinese baby boomer market on the way. Warburg has invested in a number of similar industries in the PRC.
BDA Partners MD Anthony Siu said: “With the relaxation of the one-child policy, there is potential for an uptick in mother-and-baby retail sales… for retailers that have well-established brands, we expect to see more majority buyout transactions. The market is maturing.”
Previous investors into Leyou have included Goldman Sachs, WI Harper, Deutsche Bank, AsiaVest Partners, and the Carlyle Group. Carlyle remains an investor in Leyou.
Questions & Answers
Q.Which firm has acquired a majority stake in Leyou, and what is their background with similar investments?
Which firm has acquired a majority stake in Leyou, and what is their background with similar investments?
US private equity firm Warburg Pincus has acquired the stake. Warburg has a history of investing in similar industries within the People's Republic of China, suggesting familiarity with the market.
Q.What is the approximate value of the acquisition of Leyou by Warburg Pincus?
What is the approximate value of the acquisition of Leyou by Warburg Pincus?
The acquisition by Warburg Pincus is valued at between US$200-400 million. This figure represents the estimated cost of Warburg's majority stake in the retailer.
Q.What is Leyou's current operational scale in China?
What is Leyou's current operational scale in China?
Leyou operates a substantial network of 580 self-operated and franchised stores. These outlets are spread across 150 different cities within China, indicating a wide presence.
Q.What market trend is driving investment in the Chinese baby products sector?
What market trend is driving investment in the Chinese baby products sector?
The recent revoking of China's One Child Policy is expected to create a baby boomer market, prompting investor interest. This policy change suggests potential for increased mother-and-baby retail sales.