CITIC-led group pours $146m into liquor deal

The Chinese private equity firm has led a consortium of investors including New Horizon to invest in Xifeng liquor company.

Beijing-based CITIC Private Equity Funds Management has led a consortium of investors to invest more than RMB1 billion (€119.2 million; $146.4 million) in Shaanxi province-based Xifeng Liquor, a source close to the situation has confirmed.

The investment, which was made from the CITIC Mianyang Private Equity Fund, reportedly comes in advance of the company’s planned initial public offering.

Other investors in the CITIC Private Equity-led consortium include financial services company Everbright Holdings, private equity firm New Horizon and Shaanxi’s municipal government. Six of Xifeng’s product distributors, including Xi'an Zhidetong and Yan'an Baidexin Industrial Trading, have also invested in the company.

The stake acquired by the consortium and a breakdown of the investment amounts of its different entities has not been disclosed. The local government continues to be Xifeng’s largest shareholder following the equity infusion.

This is not CITIC Private Equity's first investment in a Chinese liquor producer – the firm also counts liquor brand Kuajishan as part of its portfolio.

CITIC raised RMB9 billion for its maiden vehicle CITIC Mianyang Private Equity Fund, which is the largest RMB-denominated fund raised thus far. The fund counts China’s National Council for Social Security Fund (NSSF) as its biggest single investor. The fund has made 13 investments. 

In April, the firm invested RMB330 million for the acquisition of a minority stake in home-shopping television business, Happigo, alongside Hony Capital and Sequoia Capital China.

Last month, the firm announced the launch of its second fund, a USD-denominated China-focused fund targeting commitments of between $500 million and $800 million from overseas investors. CITIC Private Equity was launched in June 2008 as the private equity arm of state-backed CITIC Securities.