Intime targets US$200m in share offering

Nevin Nie

Zhejiang department store chain plans second-quarter listing

Intime Department Store, the largest retailer in Zhejiang province, plans to raise about US$200 million from a Hong Kong initial public offering in the second quarter, market sources said.

'[Intime is] expanding aggressively and it is a very well-managed company,' a source said. 'It has a good understanding of the high-end retail market as well as the property market, which is potent because retail is all about location.'

Morgan Stanley has been hired to arrange the sale.

US buyout firm Warburg Pincus paid US$90 million for an undisclosed stake in Intime last year.

Intime, Morgan Stanley and Warburg Pincus declined to comment.

Intime operates four department stores in Zhejiang and controls five more in Hubei province through subsidiaries.

Golden Eagle Retail Group, a Jiangsu-based department store operator with nine outlets, raised US$210 million from an initial public offering in March.

The shares have risen 75 per cent since to close at HK$5.54 yesterday. The stock trades at 34 times expected earnings for next year.

Investors are betting on rising incomes in China to boost domestic consumption.

China has the seventh-largest retail market in the world and is expected to climb to No5 by 2010, ahead of France and behind Germany, according to consulting firm Retail Forward.

China's largest retailer is Shanghai Bailan, with almost 6,000 outlets, but foreign retailers are expanding in the mainland.

France's Carrefour, the world's No2 retailer, operates 70 hypermarkets in China and is the fifth-largest in the country. Wal-Mart Stores, the world's biggest retailer, has 56 stores and ranks 19th in China.

Wall-Mart is paying about US$1 billion for mainland hypermarket chain Trustmart, which operates 100 stores. The deal is awaiting regulatory approval, expected by the end of the month.

US home improvement chain Home Depot said yesterday it is acquiring Home Way, a home furnishings company that operates 12 stores in the mainland.

Intime and Lotte Shopping, South Korea's largest department store chain, said last month they planned to invest US$60 million in a 50-50 mainland department joint venture.

The two companies plan to open Beijing's largest store in the Wangfujing shopping district in 2008.

Intime expected a net profit of more than 400 million yuan on revenue of more than 10 billion yuan this year, president and chief executive Zhou Minghai said last month.

Intime is a subsidiary of China Yintai Holdings, an investment firm with holdings in property, hotels and energy projects. Yintai controls Silvertie Holding, a Shanghai-listed department store operator.