Private equity giant takes stake in Chinese retailer Leyou

US private equity firm Warburg Pincus has signed on to buy a majority stake in Beijing baby products retailer Leyou, according to a report in the Nikkei Asian Review.

Warburg’s acquisition – valued at between US$200-400 million, is a brand with a 580-store strong network of self-operated and franchised outlets operating in 150 cities. The deal was handled by investment bank BDA Partners.

The revoking of China’s One Child Policy has prompted many investors to expect a Chinese baby boomer market on the way. Warburg has invested in a number of similar industries in the PRC.

BDA Partners MD Anthony Siu said: “With the relaxation of the one-child policy, there is potential for an uptick in mother-and-baby retail sales… for retailers that have well-established brands, we expect to see more majority buyout transactions. The market is maturing.”

Previous investors into Leyou have included Goldman Sachs, WI Harper, Deutsche Bank, AsiaVest Partners, and the Carlyle Group. Carlyle remains an investor in Leyou.

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