Online beauty product retailer Jumei agreed on Wednesday to provide up to $250m in debt financing to China-based online parenting community BabyTree, up to $120m of which will be convertible debt.
The convertible debt element of the financing will depend on BabyTree’s financial needs and its ability to meet undisclosed performance criteria, and can be converted to equity in future. The rest of the financing is being provided in the form of a revolving credit facility sized up to $130m.
Founded in 2007, BabyTree claims to be the largest parenting site in China, with 10 million active daily users. One of its attendant mobile apps, BabyTree Pregnancy, is reportedly also the most popular baby and maternity apps in the country.
The company will use the financing to develop the e-commerce portion of its business, and plans to partner with Jumei to build a more effective mechanism to market and sell parenting products to its user base.
Jumei CEO Leo Ou Chen said: “This strategic deal with BabyTree will strengthen our ability to create greater value in an important demographic. We believe this market has vast growth potential.
“Leveraging the enormous user base of BabyTree and Jumei’s supply chain and logistics expertise in cross border ecommerce, we are confident [we will] become the dominant female ecommerce platform in China. We see significant cross-selling potentials across all Jumei product categories.”
The financing follows a $23.5m equity investment in BabyTree by Tal Education in January 2014 and earlier funding from Matrix Partners, SIG China and China Broadband Capital.