Stelux eyes China turnaround with private equity partner Boyu
HK retailer plans e-commerce site, relocation to second-tier cities, via its private equity partner
Stelux Holdings, a Hong Kong-based retailer of mid-priced spectacles and watches, said its co-operation with the private equity firm Boyu Capital creates operating synergies that will help it to turn around its China business within three years, aided by online sales and relocation to second-tier cities.
Joseph Wong, chairman and chief executive of Stelux, which operates the Optical 88 and City Chain stores, said: "Boyu Capital offers industry expertise and seasoned managers in the competitive middle-class industry on the mainland, creating more synergies than its investment in our company."
Boyu Capital, a private equity firm specialising in China investment founded by former Ping An president Louis Cheung and Mary Ma, invested in the retailer through a subscription for HK$371 million of convertible bonds in November.
Stelux appointed Ma, a former chief financial officer at Lenovo and executive at US-based Texas Pacific Group, and Boyu's Alex Wong as non-executive directors responsible for its expansion plan on the mainland. Joseph Wong said he believed that Ma and Alex Wong would control costs with the aim of breaking even in the financial year 2015.
Joseph Wong, 52, who took the helm at Stelux in October 2011, said the two parties had been in private discussion since April last year and subsequently appointed an external consulting firm to lay out new strategy in China, where it will roll out an online shopping site in September this year, and shift its retail network into second-tier cities.
"Boyu has introduced a veteran manager who has extensive knowledge in e-commerce retail sales of electronic goods and apparels," said Wong, who highlighted the fact that Boyu is one of the major stakeholders in China's largest e-commerce firm, Alibaba, suggesting that the Hong Kong retailer had therefore found an ideal partner for its China venture.
Online retail sales in China are expected to triple to more than US$360 billion by 2015, powered both by a growing number of internet users and greater consumer acceptance of e-commerce, Boston Consulting Group said in a note last year.
Wong said to avoid cannibalisation between physical stores and online sales, the two would offer different products and prices, with exclusive products only available online.
