Digital transformation

Topsports IPO to shed light on Belle’s digitalisation efforts

Through the Hong Kong IPO of its sportswear division, China’s largest shoe retailer will show the world how much it has transformed its vast retail network with the power of digital technology.

CDH Investments and Hillhouse Capital are set to begin monetising their investment in China’s biggest shoe retailer, Belle International, by kicking off a HK$9.4 billion ($1.2 billion) initial public offering for its sportswear business.

The flotation of Topsports, launched on Tuesday, marks the first partial exit for the two Chinese private equity firms since taking Belle private for $6.8 billion two years ago and will shed light on how well they have managed to overhaul the business with new technology.

With a physical network of 20,738 stores when it was taken private, Belle had a dominant position in China’s footwear industry. It was seen as a luxury brand in its own right as well as being a local distributor for international sports and casual fashion labels such as Adidas and Timberland.

Since its Hong Kong listing in 2007, the company was often seen as a bellwether for China’s consumer goods market and for the purchasing power of China’s burgeoning middle class.

But, more recently, the company has been one of the biggest victims of China’s booming ecommerce sector as web-based sellers of non-branded shoes have upped their game.

Belle's senior management have been notoriously reluctant to shift to ecommerce sales. Chief executive Baijiao Sheng admitted that he had underestimated the negative impact of ecommerce platforms on Belle's same-stores sales.

But rather than build an online business, the company instead focused on revamping its brick-and-mortar stores and expanding its advertising and marketing effort.


At the time of the delisting, CDH and Hillhouse promised they would help to transform Belle by embracing ecommerce, digital merchandising plus smart store and inventory management.

Belle has since developed various digital transformation initiatives to optimise its operations and enhance its overall efficiency.

According to Topsports’s preliminary prospectus, the company has developed a digital toolkit to manager in-store merchandise, staff, sales target and processes. It has also deployed smart-store systems to monitor in-store activities and better understand consumers’ shopping preferences.

And already, the sportswear division appears to have benefited from these digitalisation efforts. Between 2017 and 2019, its net profit rose nearly 50% to Rmb2.2 billion ($309 million) and its total sales increased at a similar rate to Rmb32.5 billion.

Topsports currently operates 8,317 mono-brand stores and 55 multi-brand stores across China. Its international brand portfolio includes Nike, Adidas, Puma Converse, Reebok and ASICS. In particular, the company is Adidas’s largest retail partner globally and the second-largest for Nike.

Its Reg S/144A IPO comprises 930.2 million shares, equivalent to 15% of the company’s enlarged share capital and a 15% upsize option. The shares are being sold at an indicative price range of HK$8.30 to HK$10.10 per share, giving the company an implied market capitalisation of $6.6 billion to $8 billion.

Both the institutional and retail bookbuild are scheduled to end on October 2. Listing is slated for October 10.

Bank of America Merrill Lynch, which was the sole financial adviser on Belle’s privatisation two years ago, are joint sponsors of the Topsports IPO alongside Morgan Stanley.

Joint global coordinators are Goldman Sachs and CICC, while HSBC, Credit Suisse, China Securities International, ICBC International and CMB International are joint bookrunners.

¬ Haymarket Media Limited. All rights reserved.
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