TPG Leads China Bulls With Second Retail Investment

China's growth story continues to attract investors, and August 14 saw Chinese supermarket operator Wumart Stores confirm that it plans to a sell a 10.95% stake to private-equity firms TPG Capital and Hony Capital for HKD1.65bn (US$212.9mn). Fresh from announcing strong first-half financial results, Wumart will likely use the funds to pursue further mainland expansion. The deal could act as a precursor to an eventual Shanghai listing for the retailer, and underlines CFW's view that China's resilient consumer segment would look extremely attractive to private equity firms looking for exposure to both the global economic recovery and robust domestic consumption. Certainly TPG remains bullish toward China's growth prospects; the Wumart deal is its second investment in a Chinese retailer this year, having previously agreed to buy US$81mn million of convertible bonds with warrants in Chinese footwear maker Daphne International Holdings.

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