The Gulf Time Newspaper One of the finest business newspapers in the UAE brought to you by our professional writers and editors.
Bloomberg
Chinese billionaire Zhang Jindong secured a $1.36 billion state-backed bailout for the troubled retail arm of his Suning empire, marking another step in Beijing’s efforts to clean up its heavily indebted conglomerates.
A group of investors, led by the Nanjing state asset management committee and the Jiangsu provincial government, will take a 16.96% stake in Suning.com Co, according to a statement. The deal was struck at 5.59 yuan a share, the near eight-year low the stock was trading at before it was halted June 16. The shares surged 10% in Shenzhen trading on Tuesday.
Alibaba Group Holding Ltd and leading Chinese appliance makers Midea Group Co and Haier Group Co are also partners in the fund, as are smartphone maker Xiaomi Corp, and TCL Technology Group Corp. After the transaction, none of the major holders will have a controlling stake.
The bailout means Zhang will no longer control Suning.com, marking the end of a reign during which he led Suning into an array of businesses, including ownership of the Inter Milan soccer team. Bloomberg News reported earlier that the Jiangsu government, Alibaba and the other companies were considering their involvement in the bailout.
“The diversified investor portfolio helps push Suning.com to further improve the corporate governance, operations and business transformation as a retail service provider,†the statement said. “The fund will actively support Suning to grow healthily and stably.â€
Suning.com had a market value of about 52 billion yuan ($8 billion) before the trading halt, but it’s been in trouble for some time. The retail business was weakened by a slowdown in spending during the coronavirus pandemic and concerns about its cash flow intensified in September, when Zhang waived his right to a 20 billion yuan payment from China Evergrande Group, the world’s most indebted property developer.
The stock tumbled last month after a Beijing court froze 3 billion yuan worth of shares
held by Zhang — representing
5.8% of Suning.com — and creditors agreed to extend a bond for Suning Appliance Group Co, which is owned by Zhang and fellow co-founder Bu Yang.
In a separate statement, the listed retail arm of Suning, one of China’s biggest retailers of appliances, electronics and other
consumer goods, said it posted
a preliminary first-half loss of 2.5 billion yuan to 3.2 billion yuan.