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KKR makes first China healthcare investment

Kohlberg Kravis Roberts & Co LP (KKR), a leading global private equity company, announced on Thursday that it will invest $65 million of convertible bonds into China's largest cord blood bank, China Cord Blood Corporation (CCBC) for 23.8 percent of its shares.

This is its first healthcare investment in China by KKR's China Growth Fund LP. The investment funds will support the long-term development of CCBC, according to KKR.

"As we continue to build our China portfolio, we are excited to support a company that is dedicated to improving healthcare services and making a positive impact on lives in China," said David Liu, CEO of KKR Greater China.

Umbilical cord blood contains large quantities of stem cells that, if stored properly, can be used to treat more than 80 types of life-threatening diseases such as leukemia and lymphoma.

Zheng Ting, chairwoman and CEO of CCBC, said: "We are delighted to have KKR as our partner. Our senior management team is most impressed by KKR's global franchise and its strong local track record in China."

Listed on the New York Stock Exchange in 2009, CCBC runs the largest cord blood-banking network in terms of geographical coverage, with exclusive licenses to service Beijing, Guangdong province and Zhejiang province. This area covers more than 180 million people and has 1.9 million new births annually.

Liu said KKR's investment period is usually five to seven years. To improve the business performance of the companies they invest in, KKR shares resources in operation, management and accounting.

Under Chinese government regulations, only one licensed cord blood bank is permitted to operate in a particular region such as a province, a municipality or an autonomous region.

Ministry of Health approved applications of setting up cord blood banks in 10 regions including Beijing, Tianjin, Shanghai, Sichuan province, Guangdong province and Zhejiang province in 2001 and 2002.

KKR made its first investment in China in 2007 with China Tianrui Group Cement Co Ltd,by plowing $112 million, according to Reuters.

Founded in 1976, KKR had $59 billion in assets under management by the end of last year. Among its healthcare investments is hospital operator HCA Inc, the largest hospital chain in US. It was purchased in 2006 in a $21 billion deal by a consortium of KKR and other firms.