KKR buys into Chinese liquor chain VATS

KKR announces an investment in VATS Liquor Store only days after it joins other buyers to acquire Morgan Stanley's stake in Chinese investment bank CICC.

Private-equity firm Kohlberg Kravis Roberts & Co (KKR) yesterday announced it will invest in VATS Liquor Store, China's largest liquor store chain. However, it did not disclose either the consideration or the size of the stake it is acquiring.

VATS is a five-year-old business and has quickly grown to become the operator of more than 270 liquor stores covering all the provinces in mainland China. It holds sole distribution rights to a diversified and valuable portfolio of leading premium Chinese liquor brands, including Wuliangye Vintage Series, Guyuelongshan Vintage Series, Zhenjiu and Xiangjiao. VATS also distributes local wine brand Shangri-la wine, top French wines such as Petrus, Lafite, Latour and malt whisky brand Laphroaig.

According to China's National Bureau of Statistics, annual sales of white liquor in China are approximately $27 billion, and the consumption of bottled white liquor has grown at a compound annual growth rate (CAGR) of 20% in the past five years.

“We are excited to be partnering with VATS, the leading franchise in China’s liquor distribution industry,” Xiang Li, managing director of KKR Greater China, said in a written statement. “We look forward to fully utilising our global resource and expertise, working closely with the outstanding management team at VATS to support the future development of the company.”

Li joined KKR in 2009 as a member of the China team. He was earlier at Goldman Sachs, where he was a managing director in investment banking based in Beijing, responsible for client coverage and transaction execution for large state-owned enterprises, private sector companies, and government regulatory entities.

This is KKR’s second investment in the consumer sector in China after it picked up a stake in China Modern Dairy last year. China Modern Dairy is a milk supplier based in Anhui province. The investment in VATS comes only days after KKR, along with TPG Capital, The Great Eastern Life Assurance Company and the Government of Singapore Investment Corp (GIC), acquired a 34.3% stake in China International Capital Corporation (CICC) from Morgan Stanley.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media