Tencent Unit Buys 5.31% of Men's Garb Seller Heilan Home for USD400 Million
Tang Shihua
DATE:  Feb 05 2018
/ SOURCE:  Yicai
Tencent Unit Buys 5.31% of Men's Garb Seller Heilan Home for USD400 Million Tencent Unit Buys 5.31% of Men's Garb Seller Heilan Home for USD400 Million

(Yicai Global) Feb. 5 -- Heilan Home Co., a renowned Chinese men's fashion retailer, has confirmed investment from a company owned by internet titan Tencent Holdings Ltd. and the two parties will also jointly set up a CNY10 billion equity fund to invest in the garment industry.

A person acting in concert with the company's controlling shareholder Rongji International (Hong Kong) Co. and Shenzhen Tencent Puhe Limited Partnership (Tencent Partnership) signed the Equity Transfer Agreement on Feb. 2, per which the latter will contribute CNY2.5 billion (USD 397 million) to acquire 5.31 percent of the company.

The equity is transferred at a negotiated price of CNY10.48 per share, the announcement said. Heilan Home suspended trading of its A-shares after the market closed on Jan. 26 and announced introduction of a strategic investor. Its share price surged 8.03 percent to reach CNY11.44 per share that same day. Speculation held that Tencent might well be the strategic investor.

After transferring the shares, the controlling shareholder and person representing Heilan Home Co. will still hold 64.28 percent of shares, per the announcement.

Heilan Home also announced it is setting up a CNY10 billion industrial investment fund through its wholly-owned unit and in joint efforts with Linzhi Tencent Technology Co. and Ningbo Zhixin Investment Management Partnership (Limited Partnership). The fund will be invested in the apparel-related industrial chain, outstanding fashion brands and garment makersc.

Both companies are also investors in Tencent Puhe Limited Partnership, but the announcement provided no further details.

Heilan Home, which owns around 5,000 outlets and achieved sales of CNY17 billion in 2016, can be regarded as a leader in the apparel industry in both market value and chain scale, public data shows.

China's Internet giants are scrambling for offline assets in addition to competing in the online market. Tencent has taken over shares of a company under Yonghui Superstores Co. and invested in the Chinese business of Carrefour SA, a France-based supermarket giant together with the latter. On the same day that Heilan Home became assured of Tencent's investment, another supermarket chain, Better Life Group, also announced sealing strategic cooperation with Tencent.

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Keywords:   Tecent,Investment,Man's Fashion Retailer,Heilan Home