Warburg Pincus Completes Controlling Stake Acquisition of Leyou to Deepen Presence in China's Parent-Child Services Market
VCBeat (WeChat ID: vcbeat) has learned that Warburg Pincus, a leading global private equity firm, recently announced the completion of its acquisition of a controlling stake in Leyou Maternal and Child Products, an omnichannel retailer specializing in maternal and infant supplies (hereinafter referred to as “Leyou”). Company founders and executives Hu Chao and Gong Dingyu will retain their equity interests and remain in their positions. With the support of new shareholder Warburg Pincus, they are committed to building Leyou into China’s leading retail and service platform for maternal and infant products.
Leyou Maternal, Infant & Child Products was established in 1999. Adopting an “Internet Plus” omni-channel business model integrating a mobile app, online mall, and chain stores, it provides consumers with one-stop professional services and a convenient, comfortable shopping experience.
In May 2015, Leyou launched a safe, healthy, and experientialCross-Border E-Commerce for Maternal and Infant Products, and launchBrand-New O2O Experience Store. Leyou has established partnerships with more than 530 suppliers across 21 countries worldwide, offering over 30,000 SKUs in 16 major categories, including children's clothing, maternity wear, toys, strollers and car seats, infant formula, food products, feeding supplies, personal care items, and diapers.
As of September 2018, Leyou Maternal and Infant Stores had surpassed 630 outlets across more than 150 cities, with over 10 million registered members.
Warburg Pincus is a global leading private equity investment firm focused on growth investing. Warburg Pincus currently manages over $47 billion in private equity assets. Established in 1966, the firm has raised 17 private equity funds to date and invested more than $70 billion in 835 companies across 40 countries worldwide. Since entering the Chinese market in 1994, Warburg Pincus has cumulatively invested over $11.5 billion in more than 100 leading enterprises across various industries in China.
Continued optimism about the large market for infant and child services, with extensive layout in maternal and infant retail, education, and healthcare
Chen Weihao, Partner at Warburg Pincus, which led this investment, believes that the current total market size for infants and young children aged 0–6 is approximately RMB 650 billion, while the broader maternal, infant, and child market exceeds RMB 2 trillion. Following its investment in Leyou, Warburg Pincus will help Leyou enhance its capabilities in e-commerce, IT, management, and financing.
In addition to retail services, Warburg Pincus has, over the past two years, focused on consumer demand in the infant and child care sector,Obstetrics & Gynecology, Healthcare, Child EducationThe sector has accelerated its strategic layout, investing in companies such as Kidswant, Amcare, Jinxin Fertility, U-ABC, September Education, Zhangmen 1-on-1, and Yuanfudao. The total investment in the infant and child consumer sector exceeded $1.1 billion across nine portfolio companies.
Chen Weihao stated, “The domestic maternal and infant market is large in scale. Currently, there is a significant gap between the per-customer spending penetration rate in China and the consumption levels in developed countries, indicating substantial room for growth. This will also be the main driver of development in the maternal and infant market. Meanwhile,”The maternal and infant market is relatively fragmented, presenting significant opportunities for consolidation.“Kidswant is one of Warburg Pincus’s successful investments in the maternal and infant retail sector. We believe that the industry experience and network accumulated in the maternal and infant market can provide Leyou with greater strategic support, helping the company accelerate business development and pursue integration opportunities, thereby establishing Leyou as a leading omnichannel retail brand in the maternal and infant sector.”
Hu Chao, Founder and CEO of Leyou, stated, “Our entrepreneurial dream is to provide safe and healthy maternal and infant products and services to parents in China. Guided by our mission of ‘ensuring children’s healthy growth and a bright future,’ we remain committed to innovation and aspire to become a leading brand in China’s maternal and infant industry. With Warburg Pincus taking over from existing shareholders, our team is greatly encouraged. We look forward to leveraging Warburg Pincus’s strength and resources to fully accelerate Leyou’s development and embark on a fast track for growth.”
Warburg Pincus Gradually Enters the Field of Holding-Type M&A
Warburg Pincus is a globally renowned private equity firm focused on growth investing. Since entering the Chinese market in 1994, it has leveraged its global platform while adhering to localized investment strategies, investing over USD 11.5 billion in China, primarily through typical minority equity stakes in growth-stage companies.
On November 1, Warburg Pincus announced the completion of its full acquisition of DKSH’s China Healthcare business. With the completion of the Leyou acquisition, Warburg Pincus’ investment strategy in China has become more flexible,Gradually entering the field of buyout M&A。
Wei Zhen, Co-President of Warburg Pincus China, believes that Warburg Pincus has cultivated deep expertise in key industries over many years, accumulating substantial industry resources and progressively refining its post-investment management system. From a broader perspective, China’s domestic capital market has also become more mature. These factors have provided Warburg Pincus with the opportunity to systematically engage in mergers and acquisitions.
According to Wei Zhen, Warburg Pincus adopts a more flexible strategy regarding equity holdings by the founding team and management. In terms of the ultimate channels for realizing investment returns, it differs from the traditional reliance on leverage, but ratherUpholding Its Growth-Investment DNA, empowering enterprises with resources and capital to drive performance growth.
Warburg Pincus currently holds investments in more than 40 Chinese companies across sectors including consumer, healthcare, financial services, real estate, and high technology. Its portfolio companies include Ant Financial, UCAR, ZTO Express, Huabao Mutual Fund, Kidswant, Amcare, Liepin, Uxin, Mofang Apartment, NIO, Dasouche, and Ziroom. In recent years, Warburg Pincus has accelerated and expanded its investment pace and scale in China, remaining committed to continuing to support and cultivate more leading enterprises driving the development of China’s new economy.
Source: Warburg Pincus
Further Reading: