London-based investment firm ARC Capital Holdings has invested CNY484.4m (US$62.5m) to acquire a 93.6% equity interest in Shanghai Jiadeli Supermarket Company.
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Shanghai-based Jiadeli is China’s fourth largest supermarket chain by sales, which totalled approximately CNY2.37bn per annum. It operates a network of 135 outlets, 85% of which are located in Shanghai and its neighbouring provinces of Jiangsu, Zhejiang and Anhui. The majority of its stores, 80%, are standard sized supermarkets while the remainder are “extended supermarkets” of 8,000 square metres plus.
ARC’s investment consists of three transactions: RMB120m, or a 26.8% stake, in newly issued equity, an acquisition of all of the equity held by Shanghai Chengkai Group for CNY328.8m, and the acquisition of half of the equity interests held by Jiadeli’s management for CNY35.6m.
ARC Capital’s pre-money entry valuation is CNY397.5m, or 17% of unaudited 2006 revenues and 4.5 times EBITDA. On a forward basis, these would be 14% of proforma 2007 revenues and four times proforma EBITDA, the company said.
“ARCH considers this to be a highly competitive entry valuation vis-a-vis industry peers of similar scale, listed or unlisted,” the group said in a statement.
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