Advent buys China mattress maker from CITIC Capital
Advent International has acquired a majority stake in Chinese mattress maker King Koil Shanghai Sleep System from CITIC Capital Partners for an undisclosed sum.
According to AVCJ Research, CITIC paid RMB160 million ($26 million) for a 57.14% interest in the company in August 2014. King Koil management team will continue to hold a minority stake under Advent's ownership.
Established in 2000, King Koil is exclusive domestic licensee of several international mattress brands, including King Koil, Aireloom and Life Balance. It claims to be the leading mattress supplier to luxury hotels in China, with a 35% market share. The company is also expanding its retail presence online and offline, with more than 250 outlets across 124 cities.
According to a statement, China's mattress market is worth $10 billion and is expected to see annual growth of 8%. For the premium segment, growth is projected to reach 16%. The market was ripe for consolidation when CITIC made its investment and it remains highly fragmented despite this rapid expansion.
"King Koil China is a leader in its industry and has established a strong brand equity presence through both business-to-business and business-to-consumer channels", said Filippo de Vecchi, managing director and co-head of Greater China at Advent. Development priorities for the company include deepening its presence in existing cities and expanding into new ones, as well as building the online presence.
Advent closed its eighth global fund in March at the hard cap of $13 billion. Europe and North America are the key geographies, with opportunities in Asia and Latin America considered on a selective basis. Within Asia, the firm targets companies in Greater China, Singapore and other Asian countries, with a particular focus on the chemicals, healthcare, education and retail sectors.
CITIC made the King Koil investment through its second China buyout fund, which closed in 2010 at $925 million. It is currently seeking $1.5 billion for its latest vehicle, having combined the teams that previously pursued separate China and international strategies. The firm is owned by the Hong Kong-listed entity of CITIC Group, Tencent Holdings, Fubon Life Insurance, and Qatar Holdings.
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