Suning Sells 23% Stake to State-owned Investors, Raising 14.8 Billion Yuan

(Source: Suning International)

Retail giant Suning.com announced on Sunday it has received 14.8 billion yuan ($2.3 billion) in investment from state-backed investors in exchange for a 23% stake in the company, leading to a change in management.

The two buyers – Shenzhen International Holdings and Shenzhen Kunpeng Equity Investment Management, both owned by the People’s Government of Shenzhen Municipality – agreed to purchase 8% and 15% of Suning.com’s shares, respectively, at a price of 6.92 yuan per share.

After the deal closes, the publicly-listed company will no longer have a controlling shareholder or an actual controller. However, Zhang Jindong, Suning’s billionaire founder, will hold a 21.83% stake along with Suning Holdings Group and Suning Appliance Group, remaining the largest shareholder of the business.

“The transaction, during which the company introduces strategic shareholders, will help the company to further focus on retail services, sharpen core retail skills in all scenarios as well as improve efficiency and profitability of the company’s assets and business,” Suning.com said in a statement.

The retailer also unveiled plans to establish its South China headquarters in Shenzhen, where it can fully leverage the advantages of local resources, in order to “increase the company’s operational capability and profile in Guangdong-Hong Kong-Macau Greater Bay Area and effectively build market share”.

Suning.com climbed by 10% daily limit to 7.7 yuan on Monday. The company had temporarily suspended trading on Thursday last week, the day it revealed that shareholders planned to sell a 20% to 25% stake to then-unnamed buyers.

Concerns over the financial health and liquidity of Suning.com’s parent company have been growing since last year as the pandemic resulted in weak demand and temporary store closures, while competition intensified with rival retailers platforms including Alibaba, JD.com and Pinduoduo.

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According to the company’s financial report, its net income decreased by 93% in the third quarter of 2020, following a net loss in the first six months. Meanwhile, a debt cliff looms for the company, as the total liabilities of Suning.com reached 136.14 billion yuan through October 2020.

On Sunday, Jiangsu Football Club (Jiangsu FC), which is owned by Suning Holdings Group, announced that it “will cease operation of teams at all levels” due to financial reasons, though they just won their first Chinese Super League three months ago. Apart from Jiangsu FC, Suning Holdings Group also spent 270 million euros ($307 million) to acquire Italy’s Inter Milan soccer club in 2016. Its decision to dissolve Jiangsu FC has given rise to uncertainty over Inter Milan’s future, too.

Founded in 1990, Suning Holdings Group has two listed subsidiaries at home and in Japan: Suning.com and Laox. Its business scope covers retail, real estate and financial services.