EQT buys China pest control business

Jade acquired control of Guardian in 2018 for an undisclosed sum. The middle market GP claims the company has since grown by more than 30% per annum while maintaining a healthy profit and declared a 3.3x multiple and 40% IRR on the investment.

The firm noted that Guardian’s pest control services have improved living conditions and decreased negative environmental impacts by using only environmentally friendly and low-toxicity chemicals instead of pesticides.

Jade supported the upgrade of an internet-of-things IT system that uses sensor-based rodent traps and remote monitoring systems to increase service efficiency, reduce unnecessary manual visits and cut chemical usage. It also supported 12 add-on acquisitions in new and existing domestic markets. Some acquisitions extended operations into areas such as forestry pest control.

EQT - which recently announced a merger with Baring Private Equity Asia - is investing via its Mid Market Asia III fund. The vehicle closed on USD 800m in 2018 with a view to writing cheques in a range of EUR40-100m (USD 44-110m). It intends to support digital innovation of pest control products and services while investing in areas such as digital rodent traps, promoting lower chemical usage, and reducing the number of manual site visits.

Founded in 2011, Guardian is the largest local Chinese pest control operator with a strong presence in eastern and southern China. During the past 10 years, it has grown from a regional player to a leading national player. The founders will retain a minority stake in the business and remain in the management team.

The company has a strong position in high-end commercials verticals, including multinational chain restaurants, retail and public verticals, including airports. Clients include Starbucks, Carrefour, McDonald's, 7-Eleven, and Hyatt hotels.

EQT aims to leverage its experience in this sector with Sweden’s Anticimex, which it acquired in 2012 and exited in 2021. During this period, Anticimex completed more than 200 add-on acquisitions and expanded its footprint from five countries in Europe to 18 countries across Europe, Asia Pacific and North America.

The plan for Guardian is to initially focus on a domestic expansion, but international moves are on the long-term agenda.

“The same opportunities in the global pest control industry also exist in China. We see an opportunity for Guardian to lead the movement in China towards pesticide-free and environmentally friendly solutions while increasing operational efficiency,” Jerry He, EQT’s head of China, told AVCJ.

“Also, with a highly fragmented market, there’s an opportunity to scale the business quickly through a systematic acquisition strategy. And when done right, this business has tremendous operating leverage. So as the company grows in scale, so too should its profitability.”

This is Jade’s second buyout full exit following the sale of Chinese lifestyle goods retailer Latt Liv to e-commerce giant JD.com in 2019. Jade had acquired the company in 2017. 

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• Topics
• Greater China
• Buyouts
• Exits
• Trade sale
• Consumer
• Support services
• China
• EQT Partners