
Bloomberg
Toys “R†Us Inc., the retailer that filed for bankruptcy in North America, has been exploring options for its growing Asian business including a potential initial public offering, people with knowledge of the matter said.
The US chain and its local joint venture partner, the billionaire Fung brothers, have been speaking with investment banks to study the feasibility of listing the Asian business on the Hong Kong bourse, according to the people. A deal could value the unit at as much as $2 billion, the people said, asking not to be identified because the information is private.
Toys “R†Us and some of its North American subsidiaries filed for bankruptcy last month, though its Asian unit wasn’t included in the proceedings. Deliberations are at an early stage, and Toys “R†Us hasn’t decided which path to pursue, the people said. Toys “R†Us owns about 85 percent of the Asian venture while Fung Group, the private holding company of Hong Kong businessmen Victor and William Fung, holds the remainder.
The ongoing bankruptcy could make a listing more complicated and harder to market to investors. Still, an IPO of the Asian unit would allow Toys “R†Us’s private-equity owners to recoup some of their investment by selling shares in a business that’s still doing well.
“Throughout Asia, income levels are rising and the consumer is trading up to more higher-end toys,†Thomas Jastrzab, a Hong Kong-based retail analyst at Bloomberg Intelligence, said. “In Asia, you should see faster growth in the toy market compared to Western Europe and North America.â€
Toys “R†Us dominates the $20.7 billion Asia Pacific market for traditional toys and games, according to consultancy Euromonitor International. It had a 20 percent share of last year’s sales of dolls, action figures, puzzles and other products that lack a video-game component. Its closest competitor in the region had a 1.4 percent share, the Euromonitor data show.
Growth in Asia Pacific helped offset weaker sales in the US and Europe in the quarter ended April 29, Toys “R†Us said in June. The toy retailer’s owners had initially discussed the feasibility of listing the Asian business as early as 2018.