JD.com invests $100m in Hong Kong's Li & Fung
Chinese online retailer JD.com is investing $100 million in Hong Kong's Li & Fung, which recently won support from warehouse investor GLP for a privatization.
The move follows JD.com's launch of a RMB1.5 billion ($215 million) logistics technology fund to be managed by delivery-focused subsidiary JD Logistics. JD Logistics – which provides shipping and cold chain services to third-party clients as well as its parent – raised $2.5 billion in 2018 from a number of PE firms, including Hillhouse Capital and Sequoia Capital China.
Singapore-based GLP is a PE-owned warehouse operator and logistics fund manager that backed a $1.4 billion take-private of Li & Fung earlier this year. Li & Fung focuses on supply chain, logistics, and onshore wholesale services, but its business has struggled in recent years.
The privatization was intended to facilitate a transformation, giving the company time to restructure and invest in new technology and infrastructure. The JD.com tie-up continues in this vein, with co-development work in digital logistics the primary agenda. Li & Fung expects tailwinds for this effort to come from the increasing complexity in global trade and the impact of COVID-19 on retail.
“Our goal to create the supply chain of the future and to improve the lives of one billion people in our global supply chain remains more relevant than ever in this turbulent world,” Spencer Fung, CEO of Li & Fung, said in a statement. “The partnership with GLP and the addition of JD will be instrumental in further strengthening Li & Fung.”
Earlier this year, JD MRO, a subsidiary focused on industrial digital upgrades and supply chain services for enterprise clients, raised a $230 million round led by GGV Capital. The deal was seen as part of a broader shift in JD’s strategy away from consumer-facing operations toward more enterprise-facing business.
GLP was acquired for $11.5 billion by a consortium including Hillhouse and Hopu Investment in 2017. Earlier this year, it closed its latest China logistics fund at RMB15 billion. GLP now manages six Chinese real estate and private equity funds, with about $19 billion in combined assets under management.
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