Embattled retailer Suning.com eyes private equity assets in turnaround bid as billionaire founder loses grip on group
- Suning.com will pay cash, issue new shares for acquisition that will dilute billionaire founder’s control of white-goods retailer
- Vendor Shenzhen Capital Group claims to be the most successful among mainland China’s private equity and venture capital firms
The firm is holding talks to buy some companies from a fund backed by Shenzhen Capital Group, it said in an exchange filing on Wednesday, without disclosing the details. The purchase will be funded by issuing new shares and partly by cash, it added.
Shares of Suning have been suspended since June 16 pending further announcement on the deal. They last traded at 5.59 yuan in Shenzhen, the lowest in eight years. Its market value has dwindled to 52 billion yuan, a 75 per cent erosion from the peak in 2015.
While Zhang, the company chairman, has been fighting hard to stabilise the group’s finances, he is expected to lose control of the firm he founded in 1990 because the share issue to Shenzhen Capital Group will dilute his holding, according to the exchange filing.
Of late, Suning and its affiliates have also been entangled in a liquidity crunch. Zhang will need to sell up to 383.5 million shares, or a 4.1 per cent stake, in Suning in the coming months for running afoul of a share-pledge agreement, according to an earlier exchange filing in May.
Its property unit has had to come out and deny market rumours that it would file for bankruptcy next month, and that Suning’s online and logistic operations would be taken over by Alibaba, the owner of this newspaper.