Wumart sells HK$1.65b shares for expansion

Mainland retailer Wumart Stores said it would sell HK$1.65 billion worth of shares to private equity investors TPG Asia and Hony Capital to fund business expansion after it posted revenue growth in the first half.

Wumart said it would sell 10.95 per cent of the company by issuing H shares and domestic stock to US-based TPG and Hony, an investment arm of Chinese personal computer maker Lenovo Group.

The retailer will issue 84.55 million H shares worth HK$930.07 million to TPG and 15.448 million H shares worth HK$169.93 million to Hony affiliate Fit Sport, both at HK$11 each, an 8.03 per cent discount to yesterday's closing price of HK$11.96.

The firm will also issue 41.52 million A shares to Hony and 8.48 million A shares to Lenovo parent Legend Holdings. The shares are worth a total of 485 million yuan (HK$549.99 million) including arrangement fee.

The shares are subject to a 12-month lock-up period after the subscription. Credit Suisse was appointed as financial adviser.

The deal reflects growing investor interest in China's retail sector as the government maintains a proactive fiscal policy to spur domestic consumer demand.

China's retail sales rose 15.2 per cent last month to 993.7 billion yuan, up 0.2 of a percentage point from June. However, the consumer price index fell 1.8 per cent in July from a year earlier, the sixth straight monthly decline, signalling that a recovery is not yet on solid ground.