Singapore's state investment company, Temasek Holdings has invested US$300 million for a 21.7% stake in Hong Kong-based global supply chain giant Li & Fung's logistics
The Temasek injection, through its indirect wholly-owned subsidiary Dahlia Investments Pte Ltd, will value the business, LF Logistics, at approximately US$1.4 billion.
In a statement, Li & Fung said that as a result of Temasek's investment, it will postpone a previous proposed spin-off initial public offering for LF Logistics. It will remain a controlling
shareholder of LF Logistics with a 78.3% stake.
Proceeds from the investment will be used to fund LF Logistics' future capital expenditures, business growth initiatives and to repay its existing bank loans.
"The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung's capital structure and financial flexibility," said Spencer Fung, Group CEO, Li & Fung.
LF Logistics has achieved multiple-year double-digit organic growth, and is rapidly growing in Asean and expanding into new geographies including Japan, Korea and India, said Li & Fung.
LF Logistics suffers under the U.S.-China tariff dispute
A Bloomberg report noted that the deal will bolster the Hong Kong-based supplier to global giants like Walmart Inc. and Macy’s Inc. as it attempts to turn its business around from a five-year profit slump.
A wave of bankruptcies and store closures among its big retail clients sparked a three-year restructuring plan and the company said earlier this month that the tit-for-tat tariff war between the U.S. and China will accelerate the diversification of its supply chain out of China.
“The company likely will miss its 2017-19 goals, struggling to retain orders from customers amid uncertain U.S.-China trade outcomes,” Catherine Lim, an analyst with Bloomberg Intelligence said in a note this month.
Nol van Fenema