Warburg Pincus seals secondary buyout of China's Leyou

Financial terms have not been disclosed, although Nikkei has reported Warburg Pincus could pay up to $400 million. CDIB held a 75% interest in Leyou as of March last year. Carlyle first backed the company in 2011 via its fourth Asia growth fund, which raised about $1 billion for Chinese and Indian investments.

Founded in 1999, Leyou is recognized as a leading branded mother-and-baby care (MBC) products retailer in China with a footprint of more than 500 self-operated and franchise stores in some 100 cities. In recent years, the company has transformed from a traditional, multi-brand specialty retailer to an online-to-offline (O2O) model.

The deal coincides with projections that China's MBC market will see robust growth in the near term as the government seeks to curb negative impacts related to an aging population base through measures such as a softening of the one-child policy. It is also seen as highlighting an evolving exit landscape for Chinese companies in light of escalating global trade tensions.

“With the ongoing US-China trade dispute, and the increased scrutiny by Chinese regulators of IPO candidates leading to an unprecedented rise in IPO rejections, domestic companies and global investors are facing a more challenging investment landscape,” Mark Webster, a managing director at BDA Partners, which advised the transaction, said in a statement. "We believe M&A deals will continue to provide a valuable alternative exit solution in this context.”

Warburg Pincus is expected to support growth through its existing network in Chinese consumer and services sectors. The firm closed its China-focused fund at $2 billion in late 2016 with a view to making investments across a range of sectors, including consumer.

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• Topics
• Greater China
• Buyouts
• Secondaries
• Exits
• Consumer
• China
• Warburg Pincus Asia
• The Carlyle Group
• CDIB Capital
• M&A
• e-commerce