Beijing, May 22 - CITIC Capital, the private equity arm of China's largest financial conglomerate, CITIC Group, is close to completing deals for two prominent domestic food firms, Chief Executive Zhang Yichen said on Thursday.
Terms of the deals, previously reported in the Chinese press, had been agreed. Zhang said he was confident regulators would approve the deals.
The first investment is in Guan Sheng Yuan (Group) Co Ltd, a leading confectionery company. Chinese state media reports have put the stake as high as 45 percent at a cost of as much as 510 million yuan ($73 million).
The investment is sensitive because Guan Sheng Yuan owns a famous Chinese candy brand, White Rabbit. Zhang said regulators wanted to be sure of the deal's merit before signing off on it.
"It needs approval from six government agencies, which we think we are close to getting," he told a private equity conference.
The second deal is for a 100 percent takeover of AVA Dairy, the principal subsidiary of a financially distressed state-owned enterprise, Zhang said.
He said CITIC Capital was talking with authorities about the buyout of AVA Dairy, the maker of one of China's major baby formula brands. State media said earlier it might cost CITIC 570 million yuan ($82 million).
"We expect this deal to probably close some time in July or August," Zhang said.
One hundred percent buyouts are relatively rare for private equity firms in China, and Zhang said the size of the deal meant CITIC Capital had already been allowed to send a team of executives and marketers to take the reins of the dairy company.
"We are already seeing significant improvements in performance," he said.
A 2005 deal for pharmaceutical firm Harbin Pharmaceutical Group , in partnership with U.S. private equity firm Warburg Pincus [WP.UL], remained the anchor for CITIC's first China fund, Zhang said. With the two new investments, the fund will be just about fully invested, he said.
CITIC Capital manages an array of holdings in China, Japan and the United States now totaling nearly $2 billion, he said.