Instead of taking the road of traditional IPO, the luxury group of China's comprehensive private enterprise giant will use the "shell" to list in the United States!
On March 23, Fosun International (0656. HK) announced on the Hong Kong stock exchange that its Lanvin group and special purpose acquisition company (SPAC) Primavera capital acquisition (NYSE Code: PV, referred to as pcac) reached a final merger agreementP align = "center" (source: announcement of Fosun Group)
The announcement said that the board of directors of pcac and Fulang group had approved the transaction. The transaction is expected to be completed within this year after meeting the usual approvals and conditions and obtaining the voting consent of pcac shareholders. After the completion of the transaction, the business of the group will be operated in the name of Fulang group and plans to apply for listing on the New York Stock Exchange with the stock code of "lanv".
As of today's close, Fosun international closed up 4.61% to close at HK $8.85/share, with a total market value of HK $73.559 billion.
total fund-raising over USD 500 million
combined estimated market value of about US $1.9 billion
According to the announcement, the estimated enterprise value of pro forma for Fulang group is about US $1.5 billion, and the estimated market value after the merger is about US $1.9 billion. The total amount raised in this transaction is expected to be up to US $544 million. According to the proposed business merger, Fulang group will become a wholly-owned subsidiary of Lanvin Group Holdings Limited.
Cheng Yun, chairman and CEO of Fulang group, said that the amount raised by the transaction will be used to improve operations and support future growth plans, including brand development and marketing, product category and retail store expansion, general working capital and future investment acquisition.
The announcement also disclosed that this transaction has set up an incentive pool with 3.6 million shares of the merged company, which will be distributed to the uncalled pcac shareholders in proportion. All shares in the incentive pool will be provided by Fosun international and Primavera capital acquisition LLC (the sponsor of pcac).
Both sides of this transaction have a lot of "background".
Fulang group was founded by Fosun international in 2017. At present, it has nearly 1200 sales points and more than 300 retail stores in more than 80 countries around the world, with a total of about 3600 employees. The group's brands include Lanvin, Sergio Rossi, Wolford, St. John knits and Caruso. The five brands have a history of more than 390 years.
In addition, according to tianyancha information, Fosun fashion obtained strategic financing from Itochu Corporation, a large Japanese trading group, Jiuxing Holdings (1836. HK), a high-end shoe development and manufacturer, and Xizhi capital, a private investment company with rich experience in China's fashion and consumption fields in October 2021. The total amount of capital reached US $300 million, and the post investment valuation had exceeded US $1 billion at that timeP align = "center" (source: tianyancha)
Pcac, the other party of the transaction, is the first spac company under Chunhua capital, China's head alternative investment management giant, launched in early 2021. Founded by Hu Zuliu, a famous economist, Chunhua capital manages a number of RMB and US dollar private equity investment funds. By the end of October 2021, its asset scale has exceeded US $17 billion (about 110 billion yuan). Its representative investment cases include many Internet "big factories" - Alibaba, meicong, xunlei, Parkson China and byteco before listing.
According to the public information of China Fund Industry Association, Chunhua (Tianjin) Investment Management Co., Ltd., a subsidiary of Chunhua capital, completed the filing and registration on April 22, 2014. At present, the asset scale is between 5-10 billionP align = "center" (source: China Fund Industry Association)
embark on the "fast track" of overseas listing Fulang CEO: don't worry about delisting risk
With regard to the "delisting theory" and "return to Hong Kong theory" of zhonggai shares that are more concerned about the current market, Cheng Yun, chairman and CEO of Fulang group, pointed out that at present, the group has not considered dual listing and is not worried about the delisting risk of the United States.
For the merger and listing, Cheng Yun said that the company is a global luxury group, and it is natural to choose to be listed in the United States. The main market of the group's business is Europe and America, and the sales in the Greater China market accounts for only 14%, which still has a lot of room for growth. Chen Tong, partner of Chunhua capital and chairman of pcac, pointed out that Fulang group is a global company, not a Chinese concept stock, so listing in the United States is a very suitable choice.
It is worth noting that this is not the first spac "water test" of the "double star system". As early as July 2019, Fosun industry (Hong Kong) Co., Ltd. in the "Fosun system" reached a spac transaction agreement with New Frontier Corporation (Code: NFC), a spac company listed on the New York Stock Exchange, to transfer the shares of its united family medical group by means of "cash + stock".
In fact, the SPAC system has set off an "upsurge" in the global capital market in recent years.
Compared with traditional IPO, spac listing process has the unique advantages of short listing process, low cost and high pricing certainty. The sole purpose of SPAC is to acquire a private company by issuing additional shares after listing, so that the private company can be listed quickly, and the sponsors and investors of SPAC can realize the return on investment.
According to the report of Deloitte, the number of SPAC issues and financing level in the U.S. market in 2021 are far higher than those in previous years, and continue to grow. In 2021, the number of spacs listed in the United States reached 613, nearly 2.5 times that of 248 in 2020, and the total fund-raising amount exceeded US $160 billionP align = "center" (source: Deloitte)
In the Asian market, Singapore and Hong Kong have also kept pace and launched corresponding systems one after another. Since the formal launch of the SPAC system on January 1 this year, the Hong Kong Stock Exchange has received 11 applications from spac companies, while Aquila Acquisition Corporation, the "first to eat crabs", has been officially listed on March 18, and its initiator is China Merchants Bank International Asset Management. Ou Guansheng, chief executive of the Hong Kong stock exchange, said that the SPAC listing mechanism has opened up a new way for issuers to list, and also enriched and diversified the types of listed products in the Hong Kong market.
"For investors, spac has accelerated the listing process and brought market increment beyond IPO.
This provides investors with a more diversified choice of risk return products, "said Chen Tong, a partner of Chunhua capital and chairman, CEO and CFO of pcac. He also said that the ability of SPAC sponsors is the key to the success of SPAC, and the process of launching spac is also the process of PE testing water and demonstrating resource ability.
It is noteworthy that Chunhua capital, together with Agricultural Bank of China International, jointly launched spac inter Acquisition Corporation at the Hong Kong Stock Exchange on January 31 this year, focusing on "new economy" companies in Greater China, focusing on innovative technology, new consumption, high-end production and other fields. At present, it is still in the process of identifying M & A targets.
"Chinese consumers understand the luxury industry and are willing to spend"
Fulang group pointed out in this press release that its brands have achieved strong growth in the past year and have performed well in their respective fields. The group has great potential to be developed in the Asian and North American markets, which is also the strategic focus of the group's development.
"Chinese consumers understand the luxury industry and are willing to consume. They are very experienced consumers," Cheng Yun said.
According to the "20202021 China luxury report" released by VIP Research Institute, affected by the epidemic, the global luxury market fell 31% in 2020, only realizing the consumption of US $263.4 billion. However, the Chinese market achieved a rapid growth of 45%, reaching US $68.9 billion, and its share in the global market soared from 12% to 26%. In 2021, the global luxury market began to recover, with a high-speed growth of 21% year-on-year, and the market size returned to US $318.7 billionP align = "center" (20112021 Chinese global luxury consumption and growth source: VIP Research Institute)
In 2021, China's luxury market made further progress, with a rapid growth of 37% in the whole year, with a total scale of US $94.4 billion. The report also points out that in 2021, the Chinese luxury market increased by 18% year-on-year compared with 2020, and the total consumption reached US $146.5 billion, nearly 1 trillion yuan, accounting for 46% of the global luxury market. The Chinese market has become the world's largest luxury market for the first time.
According to the report of Research Institute froth Sullivan, the scale of the global luxury market is expected to reach about 430 billion US dollars (380 billion euros) by 2025, and the luxury consumption of Chinese consumers is expected to account for nearly half of the global total.
According to the official website, the global revenue of Lanvin, the flagship brand of Fulang group, increased by 103% year-on-year in 2021, of which the revenue in Greater China and North America increased by 122% and 298% respectively, while the global e-commerce channel revenue increased by 407% year-on-year, 14 times higher than that in 2019.
We will wait and see how Fulang group, which firmly holds the strong demand of the global luxury market, will perform after its listing.
