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KKR enters Chinese youth clothing market through $30m Novo stake

21 Aug 2012

US buyout giant KKR has announced its first move into China’s $38bn youth clothing market with a $30m investment in Novo Holdco.

The Chinese department store says it has already expanded its network and pursued licensing agreements with international fashion brands following the deal, which was made through its KKR China Growth Fund.

That fund closed on its $1bn hard cap in February 2011, and focuses on minority investments of between $30m and $75m in greater China.

KKR Greater China CEO David Liu said, “We see enormous long-term growth potential in the Chinese fashion retail industry driven by rising domestic consumption and an increasing demand for the latest fashion trends.

“The Chinese youth apparel retail market is a $38bn industry and has been growing at 16 per cent per annum since 2005.

“Novo has developed a unique business model with extensive local network and supplier relationships which enable it to fully capitalise on the rising demand in the Chinese youth fashion market over the long term.”

Last week it emerged KKR-backed China Mengniu Dairy, the country’s largest dairy producer, was in talks to buy Hong Kong-listed raw milk supplier China Modern Dairy Holdings.

KKR and COFCO Corp, Mengniu’s largest shareholders with 24 per cent and 20 per cent stakes respectively, have entered talks over a possible deal.

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