KKR, the US private equity firm known for its long history of acquisitions, is in talks to acquire an 85% stake in a Chinese beverage company. That company, reportedly, is Dayao, a growing soda brand.
“This deal has been a year in the making,” a source close to the transaction told 36Kr.
When approached for comment, Dayao declined to respond.
According to 36Kr’s sources, Dayao’s revenue in 2024 is expected to be in the nine-figure RMB range.
The company had previously been rumored to be preparing for an IPO in Hong Kong as early as the second half of this year. But this development indicates a notable shift: while many consumer brands are moving to go public amid favorable market sentiment, Dayao’s founding team appears to be taking a different route.
KKR is known for a disciplined and pragmatic investment approach. It is also one of the most established private equity firms globally.
Dayao, meanwhile, has become one of China’s fastest-growing beverage companies. In 2014, it made an unusual move by targeting the foodservice channel, a segment long overlooked by major cola brands. That decision opened a new path in China’s competitive beverage market.
The foodservice channel is notoriously difficult to enter. It’s fragmented and localized, often requiring distributors to win accounts one door at a time. Beverage shelf space in restaurants is also limited, typically dominated by staples like Coca-Cola and Sprite. That leaves little space for new entrants.
In this context, Dayao’s traction is significant. In a 2023 interview with 36Kr, the company said more than 70% of its sales came from this channel.
According to its official website, Dayao now partners with more than 1,000 distributors and has a presence in over one million retail outlets across 31 provinces, autonomous regions, and municipalities in China. A beverage brand founder told 36Kr that by 2022, Dayao’s omnichannel sales in one city in Northwest China had already surpassed Coca-Cola’s, briefly displacing the soda giant’s dominance there. “What’s more, breaking into the Fifth Ring [Road] in Beijing was a major milestone. Dayao shattered the longstanding myth of Arctic Ocean’s unshakable grip on the city,” the founder added.
The deal with KKR also highlights a striking divergence from current market sentiment. While many investors are hedging amid uncertainty, KKR is doubling down. In the first quarter of 2025, the firm raised USD 30.54 billion in new capital, pushing its total assets under management to USD 664 billion, a 15% increase from the previous year.
“We were founded on this day in 1976. And I have been here nearly 29 of those 49 years,” KKR co-CEO Scott Nuttall said during the Q1 2025 earnings call. “Over this period, the firm has seen a number of cycles and dislocations. In our experience, times like this yield some very attractive investment opportunities.”
A KKR investor previously described the firm’s approach to investing in China as aligning capital with the country’s industrial development. That strategy has historically included deals in sectors ranging from agriculture player COFCO Meat to urbanization-focused firms like NVC Lighting and Haier, as well as ByteDance during the mobile internet boom.
“Since the pandemic, dollar-denominated funds have done virtually no major buyouts in China. This deal may signal a shift in the wind, a change in how global capital views Chinese consumer businesses,” an investor told 36Kr.
In 2023, Dayao announced a goal to go national within five years. Yet no legacy Chinese soda brand has built a truly nationwide footprint. With KKR’s operational support and management expertise, however, Dayao may have a shot at expanding into larger retail chains and evolving from a regional player into a national brand.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Zhong Yixuan for 36Kr.