CLSA seals second Asia diapers deal

This is the first China investment - and second overall - by CLSA's ARIA Investment Partners IV, a fund that focuses on Asian mid-market companies. The fund's debut deal is also in the diaper space: a $10 million commitment to India's Noble Hygiene Private in February. 

Established in 2001, Hangzhou-based Coco Healthcare distributes products nationwide under its Coco brand. It is also China's largest exporter of baby diapers.

Driven by rapid urbanization, better education and improved healthcare, the country's adult incontinence market is expected to see compound annual growth of 15-20% over the next five years. Meanwhile, the gradual relaxation of the one-child policy should support increased demand for baby diapers.

In Asia as a whole, the baby and adult diapers market is estimated to be worth $13.2 billion.

Miranda Tang, managing director of the ARIA funds, said the China and India deals were identified through top-down research, analyzing the market trends and micro-segmenting into the consumer sector to find market leaders in the diapers segment. Most Asian manufacturers usually have both adult and baby product lines. 

"As the children grow older and start to be toilet-trained, they use fewer diapers. That's the other way around for adults. They start with light incontinence products, and then move to traditional diapers. Once mobility is confined for the elderly, the usage actually goes up and becomes a predictable and steady demand," said Tang.

She sees the investment in the context of a "graying" population, with China expected to follow trends seen in more developed economies and deliver more investment opportunities that leverage its ageing population.

In addition to helping Coco develop its export markets, CLSA CP will assist in setting up online platforms, furthering regional expansion, and brand building.

The ARIA funds focus on retail and consumer, specialized manufacturing, food and beverage, and consumer technologies. They look to invest $10-60 million per deal, with possible co-investment for transactions of up to $100 million. Tang expects to complete one or two more deals in Asia this year.

Operating offices in Hong Kong, Singapore and Tokyo, CLSA CP manages approximately $3 billion across six investment vehicles. In addition to ARIA, it also runs real estate fund Fudo Capital, Japan-focused Sunrise Capital, the Clean Resources Asia Growth Fund, and a fund focused on Asia transportation investments.

There is also the Nexen Global Fund, which is mainly backed by Korea's National Pension Service (NPS) and targets assets that are of interest to domestic tire manufacturer Nexen Tire Corp.

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• Topics
• Greater China
• Healthcare
• Consumer
• China
• healthcare
• Consumer
• CLSA Capital Partners
• Growth capital
• manufacturing