KKR says to invest $65 mln in first China healthcare deal

HONG KONG, April 12 Thu Apr 12, 2012 6:01am EDT

HONG KONG, April 12 (Reuters) - KKR & Co LP has agreed to invest $65 million in China Cord Blood Corp, the two companies said in a joint statement on Thursday, the global private equity firm's first healthcare investment in China,

KKR's investment through a convertible bond into China's largest cord blood storage company will give the private equity firm about 24 percent of China Cord Blood on a fully diluted basis, according to an industry source.

Cord blood is found in the umbilical cords of newborn babies and is increasingly stored and used to treat diseases such as leukaemia and lymphoma.

China Cord Blood, listed on the New York Stock Exchange since 2009 with a market cap of about $200 million, would use the money to expand operations in China, said the sources.

China's penetration rate for cord blood storage is just 1 percent, but with a growing middle class and continuing government restrictions on how many children people can have, that rate is expected to rise as Chinese parents invest more in their children's wellbeing.

China Cord Blood has operations in Beijing, Guangdong Province and Zhejiang Province, an area with more than 180 million people and about 1.9 million births annually, the statement said.

KKR invested in China Cord Blood through its $1 billion KKR China Growth Fund. Other investments from the fund include a $60 million in investment in the initial public offering of China Outfitters Holdings Ltd as a cornerstone investor.

The sources could not be identified as they were not authorised to talk to the media.

Citigroup Inc was financial adviser to KKR.

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