Xinyu goes for retail growth with share sale
Xinyu Hengdeli Holdings, a Hong Kong-listed watch distributor, will sell shares to Swiss watchmaker Swatch Group, Singapore government investment arm Temasek Holdings and fund manager United Capital Investment to partly fund its purchase of a Hong Kong retailer and expansion in China.
Swatch, Temasek and United Capital agreed to buy 148.5 million new shares in the firm, Xinyu said without giving the price. Based on their last quoted price of $3.725 before trading as suspended on Tuesday, the shares are worth $553.16 million.
After buying 123.5 million new shares, Temasek will become Xinyu's second largest shareholder and a strategic investor with a 9.94 per cent stake and a non-executive director on its board.
Swatch will boost its stake in Xinyu from 6.5 per cent to 7.25 per cent with 12.5 million new shares. United Capital Investment will also buy 12.5 million new shares.
Proceeds of the share sale would be used mainly to finance the acquisition of Hong Kong watch retailer Elegant International Holdings and expand Xinyu's retail operations in China and abroad, said chairman Zhang Yuping.
Xinyu signed a memorandum of understanding last month to pay up to $360 million for Elegant.
The price will depend on Elegant's net profit for the financial year to March. Xinyu will pay half in cash and half with 56.25 million shares at $3.20 or less.
'The investment and strengthened co-operation with internationally renowned investors will reinforce our corporate image and boost our international presence.'
Xinyu raised $379.5 million in a Hong Kong listing last September, selling shares at $1.32 each.
