Quick Take: Heilan Home Makes Baby Steps Into Infant Apparel

Heilan Home Co. Ltd. has agreed to acquire 44% of major babywear-maker China Yeehoo Group Ltd. for 660 million yuan ($99.6 million), as the Chinese fast-fashion brand ventures into infant apparel.

Childrenswear had the strongest growth among all apparel in China in 2016, according to Euromonitor International. The market expanded 7% from a year ago to reach 145 billion yuan, Euromonitor said.

Heilan said in regulatory filings that after the deal, Hong Kong-based Best Kids International Ltd. will remain the largest shareholder of Yeehoo with a 46% stake. Lunar Capital, a venture-capital firm that focuses on the consumer industry, will keep its 10% share of Yeehoo.

According to the filings, Yeehoo’s net profit in 2016 was 36.3 million yuan. Net profit is projected to exceed 120 million yuan in 2018, 144 million in 2019 and 173 million in 2020, the filings said, without projecting 2017 earnings.

Euromonitor said the major growth engine of infant apparel in China was the comparatively higher birth rate in 2016, due partly to the Year of the Monkey, as the monkey is perceived by many Chinese parents as one of the luckier zodiac animals. Moreover, the end of the country’s one-child policy in 2016 has led to second children being born in many families.

Contact reporter Aries Poon (ariespoon@caixin.com)