Hong Kong's LionRock exits UK shoe brand Clarks
LionRock Capital, an Asian private equity firm that invests in global consumer brands with a China growth angle, has agreed to sell its stake in British shoe brand Clarks to Viva China, a holding company controlled by Li Ning, founder of the eponymous Chinese sporting goods brand.
Viva China already owns 51% of Clarks. LionRock acquired a majority interest in the company in February 2021, committing GBP 100m (USD 119m) to position it for long-term growth and support global expansion. Viva China was then brought in as an investor.
The Clark family, which had until LionRock’s arrival, controlled C&J Clark since its establishment 197 years ago as a single store in a village in southwest England, retained an interest in the business. They will continue to be a shareholder once LionRock exits.
The initial deal was contingent on creditor approval for a company voluntary arrangement (CVA) regarding Clarks’ 320-store network in the UK and Ireland. This involved converting 60 outlets to nil rent, with landlords receiving a share of turnover rather than fixed rental payments.
LionRock said in a statement that, following the restructuring, Clarks saw significant improvement in its financial performance. The company achieved global revenue of GBP 920m and net profit of GBP 55m for the 12 months ended January 2022. This compares to a net loss of GBP 180m a year earlier.
“It’s been a pleasure working with Viva China and the Clark family in transforming the business and expediting the brand’s growth globally, especially to tap into the China market,” said Daniel Tseung, who established LionRock in 2011 after a 10-year stint with the PE division of Hong Kong-based conglomerate Sun Hung Kai Properties.
“We are extremely pleased to see the progress in expanding the company's global operations and worldwide customer footprint. Our investment has strengthened Clarks’ position as one of the world's most recognised brands and generated attractive returns for our investors.”
The company claims to operate in 100 markets globally through retail, wholesale, franchise, and online channels. It generates revenue from the rights to a portfolio of more than 22,000 pairs of shoes, as well as direct sales and franchise and wholesale fees.
LionRock and Li are frequent collaborators. Earlier this year, they teamed up to sponsor a special purpose acquisition company (SPAC) that filed to list in Hong Kong. Li-Ning – the company – also participated as anchor LP in a fund launched by LionRock that targets brands at the nexus of consumer and sports, such as clothing, shoes, accessories, and food and beverage.
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