StanChart invests in China retail(2)

The bank’s private equity arm has entered into a strategic agreement to acquire maternity and children’s clothing business Aiyingdao despite slowing growth in the country’s retail sector.

Standard Chartered Private Equity has entered into a cooperation agreement with Guangdong-based Aiyingdao Children Department Store, a maternity wear retailer, according to a company statement. The firm did not disclose financial details of the transaction. 

The cooperation agreement ensures that Aiyingdao gets equity finance from the bank’s private equity arm and will use the capital to expand the business across China. The business focuses on maternity, infant and children’s clothing, a sector that is fast-growing in the country, according to the firm. 

“[Standard Chartered Private Equity] has been closely following the investment opportunities in the consumer and retail sector in China, and we are very pleased to have the opportunity to establish a strategic partnership with Aiyingdao,” said Wei Zhu, head of private equity Greater China at Standard Chartered, said in a statement.  

“We look forward to working with the management team to continue to grow the business and provide high-quality products and services to expectant mothers, infants and children in China, thus contributing to the positive development of [the] sector.”

Private equity firms invested in Chinese retail businesses have struggled as China’s recent slowing growth has decreased profit margins. Firms must therefore invest in specialised sub-sectors within retail that are still growing, industry sources told Private Equity International earlier. 

Slowing GDP growth is stifling both luxury and low-end sectors, since people are becoming more price-conscious and more suspicious of unbranded goods. However, China’s mid-market sector is growing by an average of about 18 percent, according Derek Sulger, founder of Lunar Capital. “The middle market is seen as high-quality goods, but within reach of the middle class,” he told PEI earlier.