China’s Suning sells stores to CITIC Goldstone for $655m
Suning Commerce Group, China's leading home appliance retailer, has sold 11 stores to CITIC Securities’ direct investment arm Goldstone Investment for RMB4.01 billion ($655 million).
Goldstone will capitalize the underlying assets to set up a private equity fund, Suning said in a filing without disclosing further details. The sale will generate RMB1.3 billion for the company, which will continue to operate the stores.
In April, CITIC Securities, China's largest broker, won regulatory approval to issue the country's first real estate investment trust (REIT), backed by two office buildings worth a combined $807 million. The Qianhang Specific Asset Management Plan REIT, managed by Goldstone, raised RMB5.2 billion from Chinese institutional investors and started trading on Shenzhen Stock Exchange.
The deal comes as Suning struggles to run its traditional bricks-and-mortar chain store business in the face of increased online competition. It manages more than 1,500 stores in mainland China, 27 stores in Hong Kong and 13 in Japan. The retailer reported a loss of RMB755 million for the first six months of 2014, compared to a profit of RMB734 million for the same period last year. It was the first time in a decade that Suning posted a loss in an interim report.
Meanwhile, the company is investing heavily in its online business. Last October Hony Capital and Suning - also one of the PE firm's portfolio companies - bought a controlling interest in Chinese online video streaming platform PPTV for $420 million. In January, Suning acquired group buying site Manzuo, facilitating a full exit for VC backer KPCB China.
Goldstone was incorporated in October 2007 with RMB5.2 billion of registered capital. Chairman and CEO Yibing Wu and managing director David Lin left the firm within six months last year. Goldstone's US dollar-denominated fund has been discontinued but the company remains active on renminbi side, raising capital for its RMB5 billion vehicle that launched in 2012.
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