From The Acquisition Of Mcdonald'S To Investment In Perfect Diary And Spark Thinking, Carlyle Has Increased Its Bets On New Economy Company

Recently, Yixian e-commerce, the parent company of perfect diary, a new domestic beauty brand, officially landed on the New York Stock Exchange and raised $617 million, becoming the first Chinese beauty group to go public in the United States.

Carlyle is one of the main private equity institutions that share this IPO feast. In September this year, Carlyle jointly led the e-round financing of e-commerce of Yixian, with the investment capital from CGI IX investments, an affiliated company of Carlyle Asia partners growth I.

"We are more optimistic about consumer projects, which is also a big trend." Carlyle Investment Group Managing Director Liu Wanlin said in an interview with reporters including the 21st century economic report. From the demand side, China has a large population, the disposable income is growing, and the consumption pattern is upgrading. From the point of view of new product design and supply chain upgrading, new product design opportunities are also emerging.

It is understood that Carlyle has invested in global consumer goods and retail for many years. As of June 30, 2020, Carlyle has invested 129 projects with a total equity investment of 16.8 billion US dollars. Among them, famous global brands include moncler, golden goose, beats electronics, vogue international, Dunkin 'brands, etc.

In the Chinese market, Carlyle has invested in such brands as tebuk and lolai life, and established a new company with CITIC Capital in 2017 to acquire McDonald's businesses in mainland China and Hong Kong. In recent years, this foreign-funded PE, which has long-term research on China's traditional industries, has begun to embrace new economy and new consumption companies such as perfect diary.

Bet on high growth and high moat new economy company

Carlyle is one of the largest global investment companies, with assets under management of $230 billion as of September 30 this year. At the same time, Carlyle is also one of the first batch of international first-line private equity funds to enter China. It set up offices in Hong Kong in 1998, and then in Beijing and Shanghai respectively. At present, Carlyle has been deeply involved in the Chinese market for more than 20 years.

"We attach great importance to the Chinese market." Liu Wanlin said. At present, Carlyle Asia mainly manages three funds: Asia M & A fund (the fifth phase of which is US $6.55 billion), growth fund and RMB fund. As of September 30, 2020, Carlyle has invested more than 110 projects in China, with a total equity investment of more than US $10 billion. Its core investment industries include consumption and retail, health care, financial services, technology, telecommunications and media and industry.

Liu Wanlin said that Carlyle's advantages in investing in the Chinese market lie in: on the one hand, as a private equity institution that invests in the world, Carlyle can apply its experience and resources accumulated in the European and American markets to the Chinese market, so as to help the invested enterprises improve their efficiency and expand their markets.

On the other hand, it has a localized team in China, which is relatively grounded and quick to make decisions. "Carlyle is very fast in foreign institutions. Many people may see that we have invested in projects, but they have no idea how fast we are." Liu Wanlin said that for the long-term tracking industry and target, once the investment opportunity appears, the team can make faster decisions. From the decision to submit a proposal to the global investment committee to the final approval of the project for due diligence, the fastest time is only one week.

In fact, Carlyle Asia has invested in a handful of projects every year. Taking this year as an example, Carlyle Asia has invested in four projects: Spark thinking, perfect diary, xinlitai (listed Biomedical Company) and Flanders (transmission technology company of Siemens). Among them, spark thinking and perfect diary belong to the head companies in the field of new economy segmentation.

"In terms of historical business situation, we will have a deeper understanding of traditional industries. But in recent years, we have also made relatively big changes in the direction of investment, more to embrace high growth new economy companies. " Liu Wanlin explained.

In the specific investment process, Carlyle tends to choose companies with high moat. In the view of Liu Chenglin, the ability of thinking is the spark. When the traffic is relatively cheap, perfect diary begins to accumulate a lot of private traffic, which is its moat. A company can establish some barriers at some time, and continuously build new barriers through operation and development, which is a better target. Gong Zhizhi, managing director of Carlyle investment group, said that perfect diary has a profound understanding and insight for Chinese consumers, and has the strength to continuously and rapidly launch high-quality products. Its focus on social platform distribution strategy has created a competitive advantage, making it stand out in China's beauty market.

Seeking higher project participation and creating value for enterprises

In Carlyle Asia this year's portfolio, Citigroup, a secondary market company, is also particularly eye-catching. On September 1, Carlyle's fund purchased 5% shares of sinolite, a listed biomedical company.

"For us, we focus on private equity, regardless of the primary market or secondary market. As long as we meet our investment requirements, can create value for the enterprise, and let us have a certain degree of participation, whether listed or unlisted companies, we will track and participate. " Liu Wanlin explained to the 21st century economic report.

In recent years, Carlyle has also participated in a small number of secondary market projects. For example, in 2015, Carlyle also invested in micro invasive medical, a listed company in Hong Kong, holding more than 10% of its shares. However, unlike general fund investment in the secondary market, Carlyle also hopes to have a higher share and certain board rights when investing in secondary market projects.

Carlyle's investment projects have always been in China's market. In 2017, Carlyle established a new company with CITIC Capital to acquire McDonald's business in mainland China and Hong Kong. In 2018, Carlyle took a stake in ADICON, a third-party independent medical laboratory laboratory in China, and became the largest shareholder of aidicom.

"We have been doing M & A investment, although in terms of quantity, M & A investment is relatively small." Liu Wanlin said. The reason behind this is that China and even the whole of Asia is still a high growth market, and enterprises have relatively large development space. When the market is relatively saturated, there will be more mergers and acquisitions between enterprises. Carlyle team predicts that the Asian market will remain a high growth market for at least the next five years.

In recent years, due to the impact of the epidemic, many domestic private institutions are facing the current situation of difficult fund-raising. In this regard, Liu Wanlin said that Carlyle mainly raises funds in the international market. In recent years, due to the epidemic situation, it is not very convenient to travel abroad. However, we can communicate through video conference and basically adapt to this working mode, so the fund-raising rhythm of Carlyle has not been greatly affected.

"China's private equity investment market is still at a relatively early stage. It is easy for emerging things to have ups and downs in the early stage of development, but it does create new value, and there will be steady development of wave like progress in the long run." Liu Wanlin said. I believe that China's private equity market will have a very healthy development in the long run after the initial boom and subsequent adjustment. Therefore, Carlyle also insists on raising RMB funds in China and insists on taking this road.

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