KKR to make first acquisition in China

KKR to make first acquisition in China
Published: 02 April 2007

US buyout firm Kohlberg Kravis Roberts (KKR) has made its first acquisition in the Mainland by taking a controlling stake in a small cement maker.

KKR agreed to pay less than US$100m for control of the Henan-based Tianrui Cement. KKR declined to comment while Tianrui could not be reached for comment, said sources to the South China Morning Post.

China’s cement industry is ripe for such a strategy as there are no real national players and larger companies at the provincial level control a market share of only 1% to 2%. But the large number of players, last counted at 5000 at the end of 2005, is keeping profit margins thin.

Tianrui was included on a list of 60 cement firms given regulatory priority for project approval, loans and mergers and acquisition activity that was published in January by the National Development and Reform Commission (NDRC).

KKR, which arrived in the region at the end of 2005, and rivals including Blackstone Group, the Carlyle Group, Bain Capital and Texas Pacific Group, have been expanding into Asia with an eye on China as competition in the more developed markets of the US and Europe have crimped margins.