The strategic investment attraction of Vats Liquor Chain Store Management Co., Ltd. (hereinafter referred to as Vats Liquor Store) lasted for one year. After the CITIC industrial fund, Vats Liquor Store has got investments from American private equity giant KKR and New Horizon.
Vats Liquor Store did not reveal the investment scale and shareholding ratio of the three investment institutions.
KKR stated in the press release on December 15 that it has already invested in Vats Liquor Store. On September 28, New Horizon announced that it would invest 250,000,000 RMB Yuan and become a shareholder of Vats Liquor Store.
Few knew that investments from New Horizon and KKR came after the industrial fund of CITIC.
CITIC industrial fund was established in June of 2008 by CITIC Group and CITIC Securities (600030), and its vision was world-class PE (private equity). The first RMB fund under the management of CITIC industrial fund is the industrial investment of Mianyang science & technology city, and the total scale is about 9 billion RMB Yuan.
“Three investment institutions invest money in Vats Liquor Store just because they think highly of the development space of Vats Liquor Store’ real wines guarantee mode”, said chairman of the board of Vats Liquor Store, “We sell the products directly supplied by wineries. Our selling network falls into two levels, and the corporate can supply products directly to the shops, so that no adulterated wine can be sold at the selling system of Vats Liquor Store.”
Since the first shop at Liling in Hunan Province in May of 2005, Vats Liquor Store has approximately 300 shops in China.
With the increase in the number of shops, Vats Liquor Store has more demand on capital. Wu Xiangdong told the media honestly that Vats Liquor Store was “in great need of capital”. There is essential difference between Home Appliances Chains and Wines Chains. In the Home Appliances industry, it is permitted to purchase merchandise prior to payment, but you have to pay cash when you buy wines. As the number of shops and wines in stock increase, more and more capital will be occupied in Vats Liquor Store.
Tie Li, a marketing specialist said, with the rise in prices of famous wines in recent years, people’s demands for real wines are more practical. Therefore Vats Liquor Store can meet such individual and branding demands of middle-end and high-end customers as Vats Liquor Store aim for providing medium to high quality wines. Tie Li also thought that the number of shops of Vats Liquor Store would be about 1000 in the coming years because of the investment.
Wu Xiangdong said, three investment institutions could bring in Vats Liquor Store not only capital, but also new management ideas, which could optimize the management structure of the company. After the financing, Vats Liquor Store will push forward its management, bring in talents, and increase input on product development, construction of selling network, and informatization system.
However, Wu emphasized that this financing had nothing to do with the listing of the company. There is no time table for the listing of the company, but “Vats Liquor Store will be listed at the right time when all conditions are ready.”
It is reported that the only listed company that sells wines is Silver Base Group Holdings Limited (0886.HK), which is the sales agent of Wuliangye. It was listed in April of 2009 in Hong Kong. Tie Li thought, in comparison with the business form of Silver Base Group Holdings Limited, which is equivalent to a first-class wholesaler, Vats Liquor Store could get larger difference in prices because it gets involved with retailing. There was news that Silver Base Group Holdings Limited and Wuliangye Group might participate in the equity of each other.