CDH completes buyout of Nanfu Battery from P&G

Funds managed by CDH Investments completed the leveraged buyout of Fujian Nanping Nanfu Battery Co Ltd from Cincinnati-based Procter & Gamble Company on Nov 13.

Nanfu is China's largest alkaline battery company with more than 70 percent market share and strong distribution capabilities. CDH founders have had a long relationship with Nanfu, which started with CDH's original investment to help management engineer a "red-chip" restructuring of a State-owned enterprise in 1999.

With CDH's purchase of P&G's 78.8 percent equity stake in Nanfu for $556 million, CDH is once again in a unique position to assist management to grow and maximize the profitability of this iconic Chinese brand.

Prior to this round of investment, CDH had exited its original investment in Nanfu through a trade sale to Duracell in 2003, which was owned by Gillette at that time. P&G acquired Nanfu as part of its acquisition of Gillette and earlier this year decided to dispose of certain non-core assets, including Duracell.

With the completion of this leveraged buyout, CDH will own up to 84 percent of Nanfu's equity, including an interest of approximately 5 percent that was acquired by CDH in 2007. CDH will have the right to appoint a majority of the Company's board of directors.

Jiao Zhen, CEO of CDH Investments said that "Since 1999, the CDH team has been working closely with Nanfu Battery and maintained a very good relationship with the management team in the past 15 years. Nanfu is a household brand name in China with an extensive sales network and outstanding execution abilities, which we admire and respect."

The investment demonstrates CDH's ability to work with world-class multi-national companies, such as P&G, to pursue unique cross-border investment opportunities. Nanfu's leading position in China's large and stable alkaline battery sector, combined with consistent revenue, efficient cost structure and strong free cash flow makes the Company an ideal target for a leveraged buyout.

The Company is expected to maintain healthy revenue and profitability underpinned by strong sales power and dominant market-share position. From an operations point of view, the close and long-lasting relationship between CDH and Nanfu lowers the governance risk and improves CDH's influence over the strategy and development of this investment.

Ding Ximing, general manager of Nanfu Battery, said "CDH Investments is a trustworthy business partner of Nanfu. As the leading private equity investor in cross-border M&A and general consumer sector, we are confident that CDH will help Nanfu to once again make this partnership a successful endeavor."