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Chinese tech giants bail out Suning.com with US$1.4 billion government-backed investment in the embattled retailer
- The investment into the indebted retailer comes from a consortium led by the Jiangsu government and includes Alibaba, Xiaomi and TCL
- The deal adds to the nearly 20 per cent stake already held by Alibaba, which is participating in its first deal since its antitrust fine in April
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A consortium led by the Jiangsu government is taking a stake in Suning.com, the retail arm of billionaire Zhang Jindong’s Suning Group, marking the latest move in China’s effort to bail out its heavily indebted conglomerates.
Suning.com announced on Monday night that Zhang, Suning Group and Suning Appliance Group will sell 1.58 billion shares of the embattled retail firm, or 16.96 per cent of the company, to a fund at 5.59 yuan per share (86 US cents), according to company filings to the Shenzhen Stock Exchange. That puts the total value of the deal at about US$1.4 billion.
Investors in the fund include the Nanjing municipal government, e-commerce giant Alibaba Group Holding, home appliance makers Haier Group and Midea Group, electronics company TCL Technology and Chinese smartphone maker Xiaomi.
“This deal helps Suning out of its debt crisis,” said Maggie Hu, assistant professor of real estate and finance at the Chinese University of Hong Kong. “It contributes positively to the normal operation of business and avoids potential disruption due to bankruptcy risk.”
After the share transfer, which still needs to be confirmed by the Shenzhen Stock Exchange, Suning.com will no longer have a controlling shareholder or actual controller, the company said.
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