FountainVest, Primavera invest $557m in China pharmacy chain
FountainVest Partners and Primavera Capital have paid $557 million for a 24.78% stake in Chinese pharmacy chain Laobaixing. It will provide a full exit for EQT Partners.
The two investors will each take approximately 12.4% shares via FountainVest China Capital Partners Fund III and Primavera Capital Fund III, according to a statement. EQT Partners became the second-largest shareholder of Laobaixing when it acquired a 48% stake for about $80 million in 2008 through EQT Greater China II. This was diluted to 34.77% after the company’s Shanghai IPO.
Based in Hunan province, Laobaixing was founded in 2001 by Zilong Xie. The company claims to be the first retail pharmaceutical chain to follow a low-price superstore strategy in China. It has more than 4,800 stores in 22 provincial markets across the country. Operations are expected to benefit from domestic medical reforms aimed at improving insurance payment efficiency and reducing dependency on drugs sourced from hospitals.
Frank Tang, chairman and CEO of FountainVest, described Laobaixing as having one of the widest distribution networks of any local pharmacy chain, as well as being one of the most competitive. “We firmly believe that driven by technology promotion and industry integration, China’s retail pharmacy industry is facing huge and sustainable development opportunities, which is in line with the trend of China’s medical system reform and efficiency improvement,” he said.
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