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Supporting the economy

Feeding China’s RMB 400bn appetite for healthy food

22/05/2018

Cross border acquisition financing addresses increasing demand for healthy food and drives technological innovation

Fosun International, a family-focused multinational company, and Beijing Sanyuan Foods, one of China’s largest dairy groups, have recently closed a joint deal to acquire St Hubert, a leading French plant-based food specialist.

This deal comes at a time where in China, the urbanites have a rising disposable income and are prepared to pay a premium for health food and foreign imports. According to a survey conducted by BCG, 73% of Chinese consumers are willing to pay a premium for products deemed healthier1.  This unique combination of the old and new, the growing middle class and rapid changes in technology are creating new investment opportunities, especially for those involved with healthy food products.

Sanyuan is a Shanghai-listed producer and supplier of dairy products. This transaction helps Sanyuan to grow its business in a number of ways, in particular by introducing healthy organic products and further expanding its product lines, leveraging St Hubert’s pioneering technological innovations. Equally, while St Hubert has enjoyed its market leadership in plant-based and soy-based yoghurt alternatives in France and Italy, this acquisition accelerates St Hubert’s international expansion, particularly in the Chinese market.

According to industry estimates, China’s health food market is set to grow at an average annual rate of 10-15%, from RMB 260 billion in 2016 to RMB 400 billion in 2021, which represents a huge opportunity for both firms2.

For Fosun, by mobilizing its global resources to support the growth of Sanyuan, who is the second largest shareholder after the Chinese government, the deal is a clear example of how the firm is implementing its strategy of investing in technology, research and development, artificial intelligence and other innovative projects.

 

 

Societe Generale acted as Underwriter, Bookrunner, Mandated Lead Arranger Agent and Security Agent for a EUR 260 million senior term loan B facility and EUR 10 million senior revolving credit facility supporting Fosun and Sanyuan’s acquisition of St Hubert.

This acquisition introduces healthy foods into China and drives technological innovation. The partnership between state-owned Sanyuan and Hong Kong-listed Fosun also represents an important and practical step towards China's mixed-ownership reform which aims to bring private-sector investment and management into state-owned companies.

Over the last two decades, Fosun has been actively implementing its investment model of ‘Combining China’s Growth Momentum with Global Resources’. Thanks to the continued support from our banking partners including Societe Generale, this cross-border acquisition financing transaction marked another success and contributed to our global business development needs.

Xueqing Zhang,
President of Fosun Healthcare Holdings and Global Partner of Fosun International Limited

Societe Generale, as a leading player in Europe-related financing activities, has been successfully acting as a bridge to connect our Chinese clients to the European markets for years. As our clients increasingly look to global strategic growth options, we are able to offer integrated and customised solutions, making us a trusted partner in support of their growth strategies.

Tapan Vaishnav,
Head of Advisory and Financing Group for Asia Pacific, Societe Generale Corporate & Investment Banking

This cross-border transaction demonstrated the success of the seamless collaboration between our professionals across multiple teams, leveraging Societe Generale’s strong European structured finance origination and distribution capabilities. It also marked the second European acquisition financing transaction that Societe Generale has led for Fosun, following our leading role in Club Med’s share offer in 2015

Su Ming Lim,
Head of Strategic & Acquisition Finance for London, Societe Generale Corporate & Investment Banking