A host of firms have scored roles in U.S. private equity giant TPG Capital and Singapore sovereign fund GIC’s $115 million investment in China sportswear maker Li Ning Co through subscriptions to its convertible bonds (CB) and share acquisitions.
TPG has engaged Cleary Gottlieb and Fangda Partners as its Hong Kong and PRC counsels respectively. Li Ning, on the other hand, has retained Baker & McKenzie as its Hong Kong law and Conyers Dill & Pearman as its Cayman Islands law advisories respectively. Clifford Chance, meanwhile, is serving as the external counsel to the Government of Singapore Investment Corporation.
The Cleary Gottlieb team was headed by Hong Kong-based partner Freeman Chan, and the Bakers’ team was led by Rossana Chu, a partner with the firm’s Commercial and Securities group in Hong Kong.
TPG and GIC’s affiliates have signed up for 561 million yuan ($88.81 million) and 189 million yuan of five-year convertible bonds respectively from the company, according to Li Ning’s statement.
The deals were inked on Jan. 19 and 20 this year, and are expected to be completed in the first quarter of 2012.
TPG and GIC will own about 20 percent of Li Ning’s bonds with an annual yield of four percent after the bonds mature and get converted fully.
With the outlook on China’s equity market appearing bleak, more and more PRC companies are turning to the debt market to raise cash.
Some $4.5 billion worth of CBs are hitting Asia-Pacific markets in the next few weeks. Should the pace continue, CB sales this year would easily surpass the $20.8 billion in 2011, according to a Reuters report.
Stiff competition from global brands in China’s sportswear sector coupled with rising inventory and costs made Li Ning's stocks plummet by more than 60 percent in 2011.
The company said it plans to deploy the funds raised from the bond as working capital to strengthen its brand and set up new stores.
HKEx-listed Li Ning is an eponymous company founded by China’s Olympics gold medalist gymnast of the same name. It is one of China’s most recognisable sports brands that sells sports footwear, apparel, and accessories nationwide.
TPG, GIC and Li Ning did not engage investment bankers for the transaction, according to the Reuters report. ALB
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