Singapore-headquartered investment company Temasek has bought a 21.7 per cent stake in Li & Fung subsidiary LF Logistics.
Temasek, a sovereign wealth fund, has paid US$300 million in cash for the share, which values the logistics business at about $1.4 billion. Upon completion, Li & Fung will remain a controlling shareholder of LF Logistics, with 78.3 per cent.
As a result of this investment, the proposed spin-off IPO of LF Logistics will be postponed until further notice.
The two companies said proceeds from the investment will be used to fund future capital expenditures, repay existing bank loans and accelerate business growth initiatives at LF Logistics.
The company has achieved double-digit organic growth for multiple successive years and it maintains strong momentum from several growth drivers, including Mainland China’s expanding retail market, the e-logistics boom, accelerated development in Asean and rapid expansion into new markets including Japan, Korea and India.
“We expect the strong growth of LF Logistics to continue,” said Li & Fung group president Joseph Phi. “With operations in all of Asia’s fastest-growing cities, we are well positioned to capitalise on rising middle-class consumption and our early investment in e-logistics allows us to enjoy first-mover advantage. Our logistics strength combined with Li & Fung’s sourcing and new digital supply-chain solutions, represents a unique end-to-end offering that encompasses the entire value chain.”
Spencer Fung, Group CEO, Li & Fung added: “The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung’s capital structure and financial flexibility.”
