Unitas agrees $694m sale of Chinese condiments business

Hong Kong-listed Huabao said in a filing that it would acquire a 73.6% stake in Jiahao. A consortium led by Unitas – that also included Temasek Holdings-owned Pavilion Capital – acquired an 80% interest in the company in mid-2014 for an undisclosed sum. They worked to transform Jiahao from a family-owned and operated business into a leading B2B branded condiments platform.

The company supplies more than 200,000 restaurants across China with a broad range of condiments. Primarily operating under the Jingba, Jiahao and Zhanwang brands, its products include chicken-based cooking stock, wasabi paste, soy sauce, and concentrated fruit juice for use in cooking applications. Net profit came to RMB133.7 million ($20.2 million) in 2017, up from RMB131.5 million the previous year.

Huabao manufactures flavors and fragrances as well as tobacco and aroma-related products. The company wants to diversify its portfolio in response to changes in the fast-moving consumer goods industry, which are in turn being driven by the emergence of a more affluent and discerning consumer base in China.

“The condiment market is expected to see an acceleration in ‘consumption upgrades’ to higher-end condiment products as chefs increasingly place greater emphasis on taste, convenience and consistency,” Huabao said in the filing. The company also expects exposure to the condiments industry to contribute to its understanding of localized taste profiles and cooking methods.

Huabao recorded revenue and net profit of RMB3.48 billion and RMB1.01 billion, respectively, in 2017. Flavors and fragrances account for about 60% of total turnover. Last year, the company completed a separate listing in Shenzhen of its flavors and fragrances business.

Concurrent with Unitas' announcement that it would not raise a fourth fund, the firm's China team joined Permira but continued to manage the China portfolio. This included Jiahao, casual dining chain Gourmet Noodle House, surveillance technology firm ZNV, and Hyva Holdings, a hydraulic cylinder manufacturer of European origin that has a strong presence in China.

Earlier this year, Gourmet Noodle House – which operates under the Jiayo brand – was sold to GreenTree Inns Hotel Management for an undisclosed sum.

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• Topics
• Greater China
• Trade sale
• Consumer
• China
• Unitas Capital