Luen Thai, the Hong Kong based apparel manufacturer that recently announced a joint venture with Yue Yuen to focus on the global athletic apparel market, will float an IPO in efforts to raise approximately HK $680 million (US $72.2 million) to help fund new factories, machinery, and equipment. More than half of the funds will go to new factories in China.
The move comes as the world braces for the elimination of apparel quotas at year-end and Chinese companies ramp up the apparel end of their businesses to take full advantage of the opportunity. (see SEW_0425)
Luen Thai, which is expected to offer 225 million shares equal to about 25% of the company, would see its market cap valued at about HK $2.72 billion (US $289 million). The listing is expected to debut on the Hong Kong exchange on July 15 in the HK$2.325 to HK$3.025 range.
On the heels of Yue Yuen and Luen Thais apparel joint venture announcement last week (SEW_0426), Yue Yuen will also now become a strategic investor in Luen Thai, with the giant footwear company acquiring 9.9% of Luen Thai through the float. The total price of the stock purchase is dependent upon the market price of Luen Thais offering, but the 89.1 million shares are expected to be valued up to HK$269 million (US $28.6 million).
“Capitalizing on the strong support and the extensive business network of Yue Yuen, Luen Thai is aiming to extend its sports and active wear business.,” said Henry Tan, CEO of Luen Thai. “Luen Thai looks forward to cultivating our long-term relationship with Yue Yuen and exerting tremendous effort in achieving our shared mission of becoming the global market leader.”
Luen Thai had sales of US $544.9 million in 2003, a decline of 3.3% when measured in U.S. dollars. Net profit for full year 2003 jumped more than 66% to US $23.6 million.
