(corrects value of Carlyle's investment, and stake size, in
* Third Asian deal in the past week
* China's home appliance market expected reach $105 bln in
next two years
* Qingdao trades at historic P/E of 10.6 times
By Stephen Aldred and Denny Thomas
HONG KONG, Sept 30 Investment company KKR & Co
LP said it had agreed to buy a 10-percent stake in
Qingdao Haier Co Ltd, gaining exposure to China's
home appliances market with its biggest investment in the
country to date.
The acquisition, which is subject to shareholder and
regulatory agreement, is KKR's third Asian deal in a week as it
begins to invest its new $6 billion Asia fund, the region's
The companies did not disclose the deal value, but a person
familiar with the matter said New York-headquartered KKR paid
around $550 million.
For the Chinese maker of washing machines and refrigerators
the deal means a link to a global investment firm that could
help it expand beyond its local market.
For KKR, the deal offers a stake in a firm that is
inexpensive compared with peers and part of China's booming
Foreign firms have been keen to access China's home
appliance sector, which is forecast to grow by about one-fifth
in the next two years to $105 billion, according to data from
KKR's purchase comes less than two months after Whirlpool
Corp, the world's largest maker of home appliances,
agreed to buy a majority stake in China's Hefei Rongshida Sanyo
Electric Co Ltd for $552 million.
In 2011, Carlyle Group agreed to invest up to $194
million for a 9 percent stake in Haier Electronics Group
, a company controlled by Qingdao.
Qingdao Haier, which makes and distributes washing machines,
refrigerators, air-conditioners and other appliances, has a
market value of some $5.8 billion. Trade in its shares was
halted on Sept. 12, pending an announcement.
Founded in 1984, Haier Group was a collection of factories
on the verge of bankruptcy before transforming itself into a
global consumer brand with 70,000 employees.
Qingdao Haier owns a 47.9 percent stake in Hong-Kong listed
Haier Electronics Group, according to Thomson Reuters data.
For KKR, the purchase comes at a low point in Qingdao
Haier's valuations. The stock trades at a trailing
price-to-earnings ratio of 10.6, making it the second-least
expensive home appliance maker in the Asia-Pacific behind Gree
Electric Appliances Inc of Zhuhai, Thomson Reuters
The Chinese home appliance industry is battling higher
labour and operating costs and Chinese consumers are unwilling
to pay a premium for local products.
Despite the sluggish retail market, KKR believes Qingdao
Haier's stock is undervalued, and sees room for growth in
China's home appliances market, according to a source with
knowledge of the firm's investment strategy.
"If you look at the market today, the penetration of white
goods is about the same level as Japan and the U.S. 30 years
ago," the source said.
The source added that in China, 87 out of every 100 homes
has a fridge, but the ratio in the US is 150 fridges to every
100 homes. KKR also expects to help Qingdao Haier with
acquisitions, the source added.
KKR said last week it would lead a joint venture with China
Modern Dairy Holdings Ltd and a Chinese private equity
firm that would invest $140 million in two large dairy farms.
KKR said on Friday it had agreed to pay $1.7 billion for
Panasonic Corp's healthcare unit, in the largest
private equity offer in Asia this year.
($1 = 6.1202 Chinese yuan)
(Reporting by Stephen Aldred and Denny Thomas; Additional
reporting by Michael Flaherty; Editing by Jane Baird and Jason