Li & Fung issue tops US$250m
DAVID SAUNDERS
Li & Fung, one of Hong Kong's leading trading houses, raised more than US$250 million from a new share placement yesterday, saying it would use the money to fund its new Internet strategy.
Its privately owned parent Li & Fung (1937), sold the block of about 60 million shares in the listed company, Li & Fung, at HK$32.50 each, a discount of 9.5 per cent to the stock's closing price yesterday of HK$35.90.
The placement was substantial for a company whose daily turnover averages fewer than 1.7 million shares a day.
Goldman Sachs, which, along with Cazenove & Co, handled the trade in a 70-30 split, said the shares were sold to a range of local institutional investors, many of whom were already investors in Li & Fung.
The parent company maintains its 50 per cent controlling interest in the listed entity following the placement, after buying an equal number of new shares. On Monday, when it reported a 26.24 per cent rise in attributable profit last year, Li & Fung announced it would commit US$200 million to developing its on-line business, saying it would help the company reach smaller customers, because of cost savings achieved doing business on the Internet.
Managing director William Fung Kwok-lun said at the results presentation the new Internet unit Lifung.com would enable the company to service customers with turnover of less than US$100 million. These new customers could contribute as much as US$2 billion by 2004 - almost as much as the group's total turnover last year - suggested Mr Fung, who was unavailable for comment.
Goldman's head of investment banking in Asia, Tim Dattels, said: "This allows them to address an entirely new segment of the market that has had no access to the sophisticated supply chain technology of Li & Fung."
Mr Dattels said Li & Fung had developed from a traditional Hong Kong trading company into the "premier supply chain management company in the world today".
He said an Internet strategy for such an operation was a "natural extension of its business".
"Their strategy is so substantial and so well thought out, it's one of the most exciting Internet strategies I've seen," Mr Dattels said. Lifung.com is scheduled to start operations in the third quarter of this year.
The sale price of HK$32.50 was a 0.3 per cent premium on the 10-day average and a 0.85 per cent discount on the five-day average. |
