Warburg Pincus backs Chinese children’s goods retailer

Kidswant was founded in 2009 with a view to providing a one-stop shop for maternity, infant and child products ranging from formula and nutrients to clothing and toys. Headquartered in Nanjing, it targets medium- to high-income households with infants and children up to 14-years-old and currently operates nine stores in the Yangtze River Delta region and Chongqing.

The team behind Kidswant was previously the senior management of Five Star Electronics, a leading electronics retailer founded by Wang Jianguo, now chairman of Kidswant. Best Buy bought a 75% interest in Five Star for $180 million in 2006. Finding it difficult to establish itself as a premium brand in China's competitive electronics market, the US retailer subsequently shuttered its own-name stores in favor of backing further expansion of the local subsidiary.

"We are excited about building on Kidswant's success and look forward to working closely with Chairman Wang and his best-in-class management team to further strengthen its market position within China's specialty retail sector," said David Li, managing director of Warburg Pincus.

Warburg Pincus has more than $30 billion under management globally and it has invested over $3 billion in China since 1994. Most recently, it committed $200 million to China Auto Rental, the country's largest car hire network.

Chinese babywear retailers have been targeted by private equity before. Last year Lunar Capital backed a management buyout of China Yeehoo Apparel for an enterprise valuation in excess of $100 million, taking a 65% stake in the company.

PAG invested approximately $54 million in Goodbaby in 2006, taking a 67% interest in what was one of the first leveraged buyouts completed in mainland China. The company listed in Hong Kong in 2010, raising $189 million, putting PAG on course for a substantial return.

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• Topics
• Consumer
• Greater China
• Expansion
• Warburg Pincus Asia
• Consumer
• China
• Growth capital