China's champion gymnast Li Ning considers taking company private, sources say

Samsonite SA

12/03/2024 05:27

By Julie Zhu and Kane Wu
       HONG KONG, March 12 (Reuters) - Chinese billionaire
entrepreneur and Olympic champion Li Ning is considering taking
his namesake sportswear company private from the Hong Kong stock
exchange, four people said, adding to a string of such potential
deals in a faltering market.
    Li is considering leading a consortium to buy out Li Ning Co
Ltd  2331.HK , which has a market cap of HK$52.85 billion ($6.8
billion) as of Monday, said the people, who have knowledge of
the matter.
    Li, 61, founded Li Ning Co a few years after retiring from a
decorated gymnastics career in 1988. He owns slightly more than
10% of the company, its 2023 interim report showed.
    A number of global and regional private equity firms,
including TPG, PAG and Hillhouse Investment, have been tapped
for their interest in joining as an investor, two of the people
said.
    The discussions to take private Li Ning Co, which made its
Hong Kong debut in 2004, are at early stages and deal details
have not been finalised, said the sources, who declined to be
identified as the information was confidential.
    Beijing-headquartered Li Ning Co said in a response to
Reuters that it had "not received any information regarding this
matter as of now."
    Li did not immediately respond to a request for comment sent
via the company. 
    TPG, PAG and Hillhouse declined to comment.     
    Stock markets in Hong Kong and Mainland China have tanked
over the past year amid the country's economic slowdown, lack of
stimulus policies, and geopolitical tensions.
    Hong Kong's Hang Seng index  .HSI  slumped 14% in 2023,
while China's benchmark CSI 300 index  .CSI300  fell 11%.
    Li feels his company is undervalued in Hong Kong and would
target a hefty premium over its current share price in a
potential buyout, two of the sources said. 
    He did not have an imminent plan to relist his company back
home, one of them added.  
    Li Ning Co was the worst-performing blue-chip stock on the
Hong Kong bourse in the past year, down 68% as of Tuesday, LSEG
data showed. That compares with a 25% drop in main rival Anta
Sports  2020.HK .
    Li was regarded as China's "gymnastics prince" after winning
six of the seven gold medals at the 1982 World Cup Gymnastic
Competition, and carried on to win six medals at the 1984 Los
Angeles Olympic Games.
    Li Ning Co said in December it would buy a Hong Kong
commercial and retail property from Henderson Land  0012.HK  for
HK$2.21 billion as its Hong Kong headquarters, which sent its
shares to a three-and-a-half-year low on the day of the
announcement.
    Li also said at the time he planned to repurchase up to HK$3
billion value of shares from the open market in the next 6
months, his first such move in its corporate history according
to Citigroup analysts. 
    In the announcement, the company's board said it believed
its current share price was "below its intrinsic actual value."
         
    ($1 = 7.8193 Hong Kong dollars)

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BREAKINGVIEWS-Escaping Hong Kong's value trap is far from cheap 
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 (Reporting by Julie Zhu and Kane Wu; Editing by Sumeet
Chatterjee and Stephen Coates)
 ((kane.wu@thomsonreuters.com; +85228436590; Reuters Messaging:
kane.wu.thomsonreuters.com@reuters.net))