US private equity major Kohlberg Kravis Roberts & Co LP (NYSE:KKR) said on Tuesday it had made a USD30m (EUR24.3m) investment in Chinese youth fashion apparel retailer Novo Holdco Limited, without disclosing the size of the stake it had taken in exchange.
Commenting on the deal, David Liu, KKR member and CEO of KKR Greater China, said the US investor expects increasing domestic consumption in China to lead to substantial long-term growth in the domestic fashion retail sector.
The country’s USD38bn youth apparel retail market has been growing at a 16% annual pace since 2005, Liu said, adding that with its business model, vast local network and supplier relationships, Novo was in a good position to take advantage for long-term of the growing demand in its sector.
In turn, Novo sees the partnership with KKR to help aggressive expansion plans for the next few years, chairman and CEO Alan Fang pointed out. The Chinese specialised retailer intends to grow through expanding its anchor store chain and developing its brands, Fang said.
KKR is prepared to bring its global resources and retail expertise into this long-term partnership to back growth at Novo, KKR member Julian Wolhardt said.
Set up by Fang in 2004, Novo currently runs 11 stores located inside shopping malls and department stores. The company also has a franchise of retail stores selling international fashion apparel and accessory brands.