SHANGHAI – Chinese conglomerate Fosun International on Monday appealed to Japanese trading house Itochu and other investors to inject $ 150 million into its fashion unit.
Fosun, led by tycoon Guo Guangchang, was one of four private conglomerates to come under pressure from Beijing in 2017 because of their frenzied pace of global acquisitions, along with HNA Group, Anbang Insurance and Dalian Wanda Group.
Unlike these three, Fosun has remained on the acquisition trail and largely intact, but it has also come under pressure to contain debt risks.
Fosun did not say on Monday how much the $ 150 million injection would reduce its stake in the fashion unit or be applied to its own balance sheet. Fosun held an 82.3% stake in its fashion unit as of June 30, according to its interim report.
“The group is well positioned to tap the resilient demand for luxury goods globally, particularly in China,” Guo, chairman and co-founder of Fosun said Monday, announcing the unit’s new funding, which must henceforth be called Groupe Lanvin. after its flagship brand, a French luxury fashion house bought in 2018.
Fosun shares slipped 0.7% to HK $ 9.16 in Hong Kong on Monday.
The new financing values ââthe Lanvin Group at over $ 1 billion, Fosun said. The company did not disclose any revenue, but its ‘happiness’ business segment, which includes Lanvin and other businesses, reported revenue of 19.28 billion yuan (2.99 billion dollars) in the first half of 2021, up 18.7% from the previous year.
âWe believe that with our vast resources and experiences as a global company, we have a lot to offer the Lanvin Group and their future endeavors,â said Masahiro Morofuji, Head of Textile Branch of Itochu, in the announcement.
Itochu has owned the rights to the Lanvin brand in Japan since 2004. It is expected to help the Lanvin Group find new store locations in Japan as well as help resolve supply chain and distribution issues.
Besides Lanvin, Itochu is a major investor in Shandong Ruyi, another Chinese conglomerate that has built a global portfolio of fashion brands but has sunk into debt.
The Lanvin Group’s portfolio includes Austrian pantyhose brand Wolford, American knitwear brand St. John and Italian men’s clothing line Caruso. Fosun added Italian shoemaker Sergio Rossi to the group in April, months after taking over German lifestyle brand Tom Tailor.
In total, the group operates around 200 stores worldwide, with 19 added in greater China in the past 15 months. It currently only generates around 10% of sales in China.
Chinese private equity group Xizhi Capital and shoemaker Stella International have also joined Lanvin’s new funding round.
Fosun aims to harness Stella’s expertise in the design and production of luxury sneakers. Itochu and Stella will station representatives at the Lanvin Group headquarters in Shanghai.
Fosun also raised $ 150 million for its fashion unit in April from investors such as New York-listed e-commerce services group Baozun and Hong Kong-listed marketing firm Activation Group Holdings.
On Friday, Fosun acquired full ownership of German private bank Bankhaus Lampe, with a view to merging it with another private bank acquired earlier. âWealthâ and âhealthâ are the other main areas of focus for Fosun.
The Lanvin deal comes amid moderate growth in retail sales in China due to recurring COVID disruptions as well as power shortages. Still, for high-end brands, there has not been a slowdown in sales growth momentum in recent months, according to US investment bank Jefferies.