(Yicai Global) May 17 -- CoStone Capital has announced plans to sell its stake in Quanyi Health, which has a chain of 2,500 pharmacies, to a large, well-known private equity firm. The deal will be the largest in China’s retail drugs sector in recent years, 21st Century Business Herald reported today.

CoStone Capital did not disclose the buyer’s name or the sale price, but informed industry sources said the new investor was Kohlberg Kravis Roberts of the United States.

The divestment is related to concerns about the fund’s investment period, Lin Ling, vice chairman of CoStone Capital and chairman of Quanyi Health, was cited as saying. CoStone Capital is not pessimistic about the sector’s development or Quanyi Health’s future, he added. 

CoStone Capital will continue to increase its investment in big health and consumer companies, Lin added.

Founded in 2016, Quanyi Health expanded from nothing to 2,000 branches and turnover of CNY6 billion (USD931.8 million) in its first year and a half. Since its establishment, the Suzhou-based company has acquired several pharmaceutical chains, including Jiangsu Hengtai and Wenzhou Yizheng Pharmacy.

Quanyi Health has also hastened the pace of new store openings in the past two years. It had sales of CNY5 billion in just three years, without making a loss. Data show that Quanyi Health owns about 2,500 directly operated stores, with annual sales of about CNY6 billion to CNY7 billion.

Judging by this data, Quanyi Health’s assets are not bad. Chen Shuyan, director of CoStone Capital’s investment department and vice president of Quanyi Health, said the company is in good shape. Its main operating results have entered the first camp of the pharmaceutical chain industry, and the firm has plans to list at home or overseas.

Public information shows that KKR is one of the world’s oldest and most experienced private equity investors. As early as November 2019, it was reported that KKR intended to acquire and privatize Walgreens Boots Alliance, a listed drugstore chain in the US, in a deal that was estimated at USD70 billion at the time.

Editor: Peter Thomas