Buyout possible for Belle International

Share trading has been halted for Hong Kong-listed shoe retailer Belle International Holdings pending an announcement related to the Hong Kong takeovers and mergers code.

It is believed CDH Investments Fund Management is working with the Belle International management on a potential buyout.

Belle, which sells shoes under brands such as Millie’s, Mirabell and Teenmix, had a market value of US$5.7 billion before the stock suspension. A deal of that size would be the biggest-ever buyout of a consumer company listed in Hong Kong, according to Bloomberg.

As shoppers have turned to e-commerce, the shoe company has been struggling with its more than 20,000 retail outlets, mostly in mainland China. Sports apparel brands dominate in China’s $55 billion footwear market, with Belle the only retailer among the top five that sells mostly fashion shoes.

The Shenzhen-based firm’s stock has risen about 21 per cent this year, although the last closing price of HK$5.27 (US 69 cents) is 15 per cent lower than its 2007 IPO.

Established in 2002, CDH Investments invested in Belle International before the shoe company’s IPO. CDH MD Hu Xiaoling is also a non-executive director of Belle International. In 2013, CFH and Belle both invested in apparel retailer Baroque Japan.

With $17 billion of assets, CDH has invested in a range of consumer companies including Chinese home appliances maker Midea Group and Hong Kong jewellery retailer Tse Sui Luen Jewellery International.

Belle’s largest shareholder, with a 21 per cent stake, is Merry Century Investments, controlled by Tang Yiu and Tang Wai Lam. Tang Wai Lam was chairman of Hong Kong-listed Mirabell International Holdings, which Belle International acquired in 2008.

Credit Suisse Trust is the second-largest shareholder with a stake of about 16 per cent.

In an exchange filing last month, Belle forecast that profit for its financial year to the end of February would fall as much as 25 per cent. The company had net income of 2.9 billion yuan (US$421 million) and revenue of 40.8 billion yuan in fiscal 2016.

Store sales fell 6.2 per cent in the fourth quarter.


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