Pacific Alliance Group, an overseas private direct investment fund, acquired China's largest group of good children companies specializing in the design, manufacture and sale of children's products for US$122.5 million. Yesterday, Liu Tongyou, vice president of the Goodbaby Group, revealed to reporters that the transaction was officially completed at the end of January this year, and this is also the first case of domestic leveraged foreign capital acquisitions in China.

Liu Tongyou introduced that in November last year, the five major shareholders of the Goodbaby signed an agreement to sell all their good-baby shares to G-Baby at a price of 122.5 million U.S. dollars. The actual controller of G-Baby is the PAG.

Liu Tongyou stated that including PAB's actual funding for bank loans and other financing sources, its own capital is well below 122.5 million U.S. dollars, and these are some of the elements of leveraged buyouts. Because PAG's acquisition of good children is not all paid in cash, the management of the company is paid in equity. Therefore, after the acquisition is completed, many of the good children's shareholders become two shareholders: PAG, which holds 68% of the shares, left. The next 32% is held by management. Previously, the management held 29% of the shares, and this time actually increased by 3%. It is reported that Song Zhenghuai, the founder and president of the Goodbaby Group, previously held approximately 7%-8% of the shares.

It is understood that the three shareholders who have withdrawn from the stock market have made huge profits this time, and Liu Tongyou revealed that the first Shanghai sold price was nearly five times that at the time of the acquisition, while the softbank and CRF sold at twice the price of the acquisition. The Goodbaby Group, founded in 1989, is currently the most well-known baby product manufacturer in China and currently holds more than 70% of the domestic market share. It also has overseas branches in North America, South America, Japan, and Europe.

Glossary

Leveraged buyout means that the acquirer uses its own little capital as the basis, and then raises or borrows enough funds from the investment bank or other financial institution to conduct the acquisition. After the acquisition, the company’s income is just enough to pay for the high proportion of liabilities resulting from the acquisition. It can achieve the goal of earning high profits with very little money.