DCP backs China expansion by Canadian vitamins brand

The China-focused GP will pay USD 35m for a one-third stake in Jamieson’s China operation and subscribe to USD 75m worth of preferred shares in Jamieson itself. In addition, DCP will subscribe to warrants for 2.53m in common shares in the company at a price equal to a 10% premium to the 20-day volume weighted average share price as of February 22, according to a filing.

Jamieson’s stock closed down 7.7% at CAD 33.50 on February 24, giving the company a market capitalisation of around CAD 1.4bn (USD 1bn). During the few weeks prior, it had been trading around the CAD 36.00 mark.

The preferred shares come with a redemption right that can be triggered between years two and five of the investment and the warrants can be exercised within the same time period, effectively allowing DCP to flex its exposure up or down.

DCP, which was established by David Liu and Julian Wolhardt, who previously held leadership positions with KKR in China, is seeking USD 3bn for its second fund. A first close of USD 2.5bn came in January 2022 and five investments had been completed by June of the same year, according to Mergermarket, AVCJ’s sister title.

Consumer and healthcare are among the firm’s target sectors. Fund II investments to date include Simple Love, a yoghurt brand also known as Jian’Ai, and Hangzhou Valgen Medtech, a medical devices manufacturer specialising in heart valve procedures.

Jamieson was established in 1922 and is best known for Jamieson Vitamins. Its line-up of vitamin and mineral supplements brands also features Youtheory, Progressive, Smart Solutions, Iron Vegan, and Precision. It has a presence in 45 countries, with China, Southeast Asia, Eastern Europe, and the Middle East identified as key expansion markets.

The company noted in its 2021 annual report that China’s vitamin market is growing at a rate that far outpaces the industry average. It has adopted a three-pronged growth strategy comprising cross-border e-commerce through platforms like Tmall and JD.com, domestic distribution through e-commerce and brick-and-mortar channels, and an international partnership with Costco.

Global revenue reached CAD 451m in 2021, up from CAD 403.7m a year earlier, while net profit rose from CAD 41.6m to CAD 52.1m. Jamieson didn’t disclose numbers for China, but revenue for the international segment increased 22.7% year-on-year – it is the company’s fastest-growing segment – and this was led by strong growth in China.

“The company’s 100-plus year history, superior product quality and exceptional reputation has made the Jamieson brand much sought-after in the Chinese market,” said Hwan Chung, a managing director at DCP.

“Working together with the Jamieson team, we are confident that our local expertise and operational capabilities will help accelerate the development of Jamieson in China and bring more high-quality health products to an expanded consumer base.”

Jamieson is being advised on the deal by Nomura, McCarthy Tétrault, and Morrison & Foerster, while CG/Sawaya Partners, Solomon Partners, Cleary Gottlieb, and Stikeman Elliott are working with DCP.

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• Topics
• Greater China
• North America
• Consumer
• Expansion
• PIPEs
• China
• Canada
• DCP Capital Partners