By Yifan Wang
State-led investors are bailing out Suning.com Co. with a CNY8.8 billion (US$1.36 billion) investment, the latest step by Beijing to keep afloat the country's conglomerates and rein in financial risks.
A fund led by Nanjing's asset administration commission and the Jiangsu provincial government will take a 16.96% stake in the e-commerce firm, Suning.com said in a statement late Monday. The company is one of China's largest online marketplaces, known especially for the sale of home applicance products.
Entities related to tech giant Alibaba Group Holding Ltd., smartphone maker Xiaomi Corp. and leading Chinese appliance makers Midea Group Co. and Haier Group are also part of the fund. After the deal, no shareholder will have a controlling stake.
Suning.com said the involvement of state investors will "lay a solid foundation for the stable and healthy development" of the company.
It shares rose 10% Tuesday, the most stocks are allowed to gain in a single day on the Shenzhen stock exchange, when trading resumed after a halt.
The bailout comes after the pandemic added pressures to operations already strained by heavy acquisition spending and rapid expansion into new businesses, many of which had led to poor returns.
Investor concerns intensified in recent months, when Suning.com repeatedly halted trading of its shares after a Beijing court froze a 5.8% stake--worth around CNY3 billion--of controlling shareholder Zhang Jindong. The stock in late June plunged to its lowest level in nearly eight years.
Chinese officials have repeatedly stepped in to curb large companies' acquisition sprees and debt-driven investments in recent years. Last year, the southern Hainan provincial government effectively took over HNA Group Co., once one of China's most acquisitive conglomerates, while Beijing in 2017 blocked state-owned banks from making new loans to real estate giant Dalian Wanda Group for several overseas investments.
In a separate filing late Monday, Suning.com said it expects its net loss to worsen by over 10 times in the first half of the year to betweeen CNY2.5 billion and CNY3.2 billion, partly due to a sharp sales decline.
Write to Yifan Wang at firstname.lastname@example.org
(END) Dow Jones Newswires