Bain, China's Yonghui pay $413m for US retailer services player

Shanghai-listed Yonghui said in a filing that it would take a 40% interest in the business for $165 million, although its cash contribution excluding overseas bank loans and other debt financing is $94 million. Bain Capital – acting through its third Asian fund, which closed in late 2015 at $3 billion plus a GP commitment of at least $250 million – will hold the remaining 60%.

Founded in 1970 and headquartered in the US, Daymon started out in label procurement and packaging design but has diversified its business significantly since then to provide a fully integrated retail program. It works with more than 100 major retailers and nearly 6,000 manufacturers in 50 countries, handling 1,700 brands and about 165,000 stock keeping units (SKUs).

The business is divided into five divisions: Daymon Private Brand Development, which works with brands on strategy, analytics, and sourcing; Galileo Branding Group, which specializes in brand identity, packaging and presentation; Omni Global Sourcing Solutions, the supply chain and logistics unit; SAS Retail Services, which focuses on improving in-store experience and management; and Interactions, the consumer experience marketing business.

Daymon posted $925.3 million in revenue for the nine months ended September 2016, compared to $1.19 billion for 2015 in full. Net profit reached $38.1 million for January-September, exceeding the $30.9 million generated for the entirety of 2015.

“Daymon’s leading global market position and impressive track record of consistent revenue growth presented a very compelling opportunity for partnership," said Jonathan Zhu, a managing director at Bain, in a statement. He added that the PE firm would work with Daymon on growth opportunities in the US and Asia’s emerging economies.

The global retail market is expected to be worth $28 trillion by 2019, with retail sales in Asia alone set to exceed $10 trillion next year. However, the region is seen as lacking expertise in areas such as brand development, strategy and merchandising services.

Yonghui said that the acquisition will not only give it access to retail technology and services, but also management expertise and support in building a global supply chain platform. The company, which received backing from Headland Capital Partners and went public in 2010, had 388 stores in operation as of year-end 2015. It reported RMB42.1 billion ($6.1 billion) in revenue for 2015 and a net profit of RMB649.5 million.

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• Topics
• Greater China
• North America
• Consumer
• China
• USA
• Bain Capital Asia
• Outbound investment