Li & Fung

Li & Fung spinoff gathers momentum

Li & Fung wants a separate listing for its Global Brands Group and is the latest Hong Kong family-owned business looking to unlock value this way.

Li & Fung has moved a step closer to separately listing the business that controls brands such as Juicy Couture and develops clothing, footwear and accessories under licence for fashion labels such as Calvin Klein and Tommy Hilfiger.   

Li & Fung, the latest Hong Kong family-owned business seeking to unlock value via a spinoff, said late Wednesday that the Hong Kong Stock Exchange had completed its initial review of the supply-chain manager’s plan to list Global Brands Group and will now consider approval. 

The proposed listing of Global Brands Group's shares is by way of a 100% distribution in specie with no new capital raised, with every Li & Fung share qualifying for one Global Brands Group share.

Li & Fung will not have any holding in Global Brands Group but the Fung family would retain a controlling 32.7% stake.

Founded in 1906 in Guangzhou and listed in Hong Kong in 1992, Li & Fung’s shares have soared since it first said it would divest the business on March 20, when it also reported its full-year earnings. Global Brands has a long-term and worldwide licence for the Juicy Couture fashion label and also owns such brands as Rosetti.
       Li & Fung's Victor Fung

Li & Fung is the latest family-owned entity in Hong Kong looking to spin off part of its business.

"This spinoff wave is going to continue in Hong Kong," Chris Laskowski, head of corporate and investment banking at Citi Hong Kong, said in an interview.

Other recent spinoffs include Great Eagle Holdings, which sold its Langham Hotel assets via a business trust-type structure last year, and the $3.1 billion divestiture of Hong Kong Electric Investments by Power Assets. December also saw Kerry Logistics Network spun out of Kerry Properties and Xinyi Solar listed by Xinyi Glass.

"Hong Kong's family-owned conglomerates are figuring out that some businesses should be let loose from the parent, to attract management talent and give them flexibility in how they grow, as well as unlocking value from a capital markets perspective,” Citi’s Laskowski said.

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