Welkin invests $17m in Chinese camellia oil brand

According to a statement, Guitaitai issued 12 million shares to Welkin at RMB10 apiece. Jiang Pu, a principal at the private equity firm, has joined Guitaitai’s board of directors.

Founded in 2008, the company supplies edible camellia oil to businesses and consumers under the Guitaitai brand. Its products are sold in about 13,000 locations in China, including supermarkets such as Suguo, Vanguard, Hypermart and Jiarundo. Revenue increased 22.83% year-on-year to RMB378.79 million in 2015, while net profit more than doubled to RMB79.79 million.

Guitaitai previously raised funding from Shenzhen Cowin Capital in 2012. Three years later, it listed on NEEQ, also as known as New Third Board, in order to raise capital for business expansion. The company plans to list on the A-share main board in the future, Jiefeng Nie, general manager of Guitaitai, told AVCJ. The latest funding will be used to construct a facility in Hunan province, as camellia seed production in China’s southern provinces is expanding.

China’s State Council wants production of oil from woody plants to reach 1.5 million metric tons by 2020, up from 450,000 tons in 2013. It also plans to develop woody oilseed plants in 800 counties nationwide and increase planted areas to 13.3 millihectares (MHa) from the current eight MHa. In addition, local authorities in southern China are encouraging companies to establish facilities and boost production.

Welkin Capital approached Guitaitai about a potential investment in 2015. The PE firm believes camellia oil has the potential to become a mainstream edible oil category, driven by growing consumer awareness of health and product quality. It took several months for the PE firm to convert its US dollar capital to renminbi in order to complete the transaction.

Commenting on Chinese companies targeting the New Third Board instead of waiting to list on the main board, Christopher Fong, a managing director of Welkin, said: “It’s a good development for the capital market in China. It provides a better option for quality companies to gain exposure on a financing platform, so that they will get used to the regular reporting system. At the same time, we’re approaching these companies like other private equity investments with a long time horizon.”

Welkin Capital was founded in 2009 by members of four families in the Greater China region. The firm, which is investing its $150 million second US dollar fund, typically focuses on mid-market companies in China.

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• Topics
• Greater China
• Consumer
• PIPEs
• Expansion
• China
• Growth capital