Actis seeks cookie fortune

"In the tier-one cities especially, multinationals have carved out a much bigger market share and - with their large advertising budgets - they have been ahead of the game for a long time," explains Max Lin, a director in Actis' Beijing office. "Those domestic brands that have prospered and moved up the value chain are those that have traditionally focused on lower tier cities."

Lin sees Jiashili as one such brand, which is why Actis decided to take a significant minority stake in the business earlier this month. The financials of the investment - made alongside Jiashili's chairman and owner Xianming Huang - were not disclosed, but the deal falls within Actis' sweet spot of $50-100 million.

Jiashili was founded in 1956 in Guangdong province as part state-owned operation Kaiping Sweet Pancake Factory. The business merged with Guangdong Jiashili Group to form Kaiping Jiashili Food in 2005 before being made into a private enterprise by Huang in 2007 and taking its current name.

Jiashili produces crackers, wafer biscuits and egg rolls, claims to be the number two player in the plain biscuit market. Sales came to around RMB900 million ($143 million) last year, having grown fourfold since Huang assumed control.

"The overall brand image is value and quality," explains Lin, who sits on the board of Jiashili. "It is not the most expensive product but it is a well-known brand in the provinces and in the distribution channels where it is present."

The company will use this new funding to increase its distribution and its product range within China. Actis intends to leverage its previous experiences of investing of the food and beverage sector to shepherd the company through its next stage of growth.

Since 2001 the emerging markets-focused firm has invested more than $600 million in consumer companies in China, including casual dining chain Bellagio and hotpot chain Xiabu Xiabu, which it exited to General Atlantic in 2012. Meanwhile, it has made similar snack food investments elsewhere including two Egyptian snack companies: cake maker Edita and sesame snack producer El-Rashiidi El-Mizan.
Lin's aim is to help turn Jiashili into a business, and a brand, that can make its presence felt more widely in China.

"The company has done very well but we do see future opportunities for Jiashili to move further up the value chain." He says. "The business has already started experimenting with higher value products and enjoyed some success. So, there is potential for us to take market share from the multinationals."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Greater China
• Consumer
• Expansion
• Actis Capital
• China
• Consumer
• Growth capital