A Capital backs Bang & Olufsen for China growth

The two investors have purchased roughly 3 million new shares at DKK60.22 apiece. On a fully diluted basis, A Capital and Sparkle Roll will own 1.59% and 6.12%, respectively, of the company.

The deal was put together by A Capital, which initiated talks with B&O late last year. André Loesekrug-Pietri, chairman of A Capital, told AVCJ that the funding came from the A Capital China Outbound Fund, which targets minority stakes in leading mid-sized European companies with strong potential in China, and secures Chinese companies as co-investors.

"Strategic partnership makes a lot of sense," said Loesekrug-Pietri. "Many European companies don't really need money, what they need is an answer to a strategic question: how to grow in emerging markets, especially in China?"

The news comes after B&O reported worse-than-expected results for its third quarter in April as sales in Europe fell and product launches were delayed.

The company has been exploring opportunities in China. In the last 12 months it acquired operations in Hong Kong and south China and opened a sales and marketing office in Shanghai. However, China still accounts for less than 5% of B&O's total revenue, compared to 15-20% among many of its global luxury peers.

"The strategic partnership will be the important step for accelerating our growth in China," said Tue Mantoni, CEO of Bang & Olufsen. "We have been very impressed with Sparkle Roll's successful track record and execution in China, especially their insights and experience in the Chinese luxury market."

Sparkle Roll, which owns 28% of Hong Kong-listed Sparkle Roll Group, is a distributor of luxury cars, jewelry, watches and fine wines in China. Its products include Bentley, Rolls-Royce, Royal Asscher, Richard Mille and Parmigiani.

This is the second investment made by A Capital. In 2010, it co-invested with Fosun, China's largest privately-held conglomerate, in Euronext-listed Club Méditerranée.

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• Topics
• Greater China
• Consumer
• Expansion
• A Capital Asia
• China
• Outbound investment
• Consumer