AVCJ

Cowin Capital exits China department store via trade sale

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Shenzhen Cowin Capital is set to make a full exit from Guangxi Nancheng Department Store as Better Life Commercial Chain Share won approval to buy its rival.

Shenzhen-listed Better Life operates supermarkets, department stores as well as electronics retail stores. The company filed its acquisition plan in May of last year but required regulatory approval to proceed.

According to the latest filing, Better Life will pay RMB79 million ($13 million) to acquire a 5% stake in Nancheng Department Store held by Nanhai Growth Fund I, an investment vehicle owned by Shenzhen Cowin.

In addition, Better Life will issue 111 million ordinary shares at RMB13.98 apiece in exchange for a 95% interests in Nancheng Department Store. Shenzhen Cowin owns an additional 2.32% of the company beyond the aforementioned 5%, so could also receive RMB12 million worth of shares in Better Life.

AVCJ Research records show that Shenzhen Cowin invested RMB34.13 million in Nancheng Department Store in 2007, picking up an approximately 7.5% stake.

Based in Nanning, Nanchang Department Store has 38 branches nationwide. It generated RMB3.1 billion in revenue in 2013, with net profit of RMB100 million. Its net profit is expected to rise to RMB110 million in 2014. The firm attempted to list onshore in 2011 and 2013 but the plans were aborted.

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