Suning’s Stocks Tumble to Six-year Low after Founder Pledges All of the Group’s Shares to Alibaba’s Taobao

All shares of Suning Holdings Group held by chairman Zhang Jindong, his son Zhang Kangyang and Nanjing Runxian have been pledged to Taobao, Alibaba’s e-commerce platform, according to the Chinese government’s credit information agency.

The pledged equity is equivalent to a total number of 100,000 shares worth one billion yuan ($153 million), the same amount as the registered capital of Suning Holdings Group. The registration date of the agreement was listed as Dec 4, according to the National Enterprise Credit Information Publicity System.

Zhang Jindong, the group’s billionaire founder, also pledged 65,000 shares of Suning Real Estate to Taobao. 

The news sent’s stock price tumbling as much as 7.5% to 8.03 yuan ($1.20) on Friday morning, the lowest since September 2014, according to Yicai Global.

Responding to the share pledge, the Nanjing-based company said the Group still holds a 3.98% stake in Suning e-buy, its core asset, and that the agreement is normal business cooperation and will not affect the commerce site’s strategic development and regular operations. It, however, did not address claims that the company is in financial trouble.

Recent reports claimed that Suning Holdings had been facing difficulties in repaying its huge bonds and was likely to sell its e-commerce business. The company refuted the claims on its official Weibo account on Tuesday.

Founded by Zhang Jindong in 1990, Suning Holdings Group has businesses in retail, real estate and financial services, and is most well-known among consumers for selling home appliances and electronics in 1,600 outlets across China. 

Suning Holdings is the parent company of Shenzhen listed and Suning Sports, which acquired a majority stake in European soccer club Inter Milan in 2016. 

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Zhang Kangyang (also known as Steven Zhang) was appointed as the president of the club in 2018, replacing Erick Thohir. At the age of 26, Zhang is the youngest boss the Italian club has ever had.

In 2015, Suning and Alibaba acquired stakes in each other, engaging in a $6.9 billion strategic partnership to strengthen areas such as e-commerce and logistics. 

Alibaba spent 28.3 billion yuan ($4.3 billion) on newly issued Suning shares for a 19.99% stake, making it Suning’s second-biggest shareholder. In turn, Suning invested 14 billion yuan ($2.1 billion) to own 1.1% of Alibaba through the purchase of new shares. 

The alliance would allow Alibaba’s online customers to try out a product at one of Suning’s outlets before purchasing it on Taobao on their phones. In turn, Suning would utilize Alibaba’s distribution network and aim to deliver products to consumers in as little as two hours.