Fosun Group, a debt-laden Chinese conglomerate, is seeking to cash out of its entire stake in Nature&Nature Co. for up to 50 billion won ($37.8 million), about five years after its stake purchase amid the Korean private company’s postponed initial public offering.
According to sources in the investment banking industry on Wednesday, Samjong KPMG is tapping multiple potential buyers of Fosun’s entire 36.5% stake in Nature&Nature as the deal’s lead advisor.
The stake up for grabs is the second-largest one in the Korean beauty care brands’ owner, following the biggest stake of 52.4% held by its founder and Chief Executive Officer Lee Hong. The third-biggest shareholder is LB Innovation Growth Fund managed by LB Investment.
The stake sale is expected to fetch between 40 and 50 billion won.
Fosun acquired Nature&Nature’s stake at about 30 billion won with an estimated valuation of 100 billion won in September 2018.
It originally intended to exit the investment through the Korean firm’s IPO.
But the listing of Nature&Nature with various Korean and global beauty brands including Olgaplus, Secretmuse, Inner Glow and Coverderm has been put off, leading the liquidity-burdened Chinese conglomerate to opt for the Korean asset’s disposal.
Olgaplus sun stick (Courtesy of Nature&Nature) FOSUN’S FINANCIAL WOES
Fosun is one of China’s leading investment companies, owning a wide array of high-profile assets such as French resort group Club Med, French fashion label Lanvin and China’s Tsingtao Brewery.
It was founded in 1992 by Chinese billionaire Guo Guangchang, also widely known as China’s self-styled Warren Buffet. Its shares have been trading on the Hong Kong Stock Exchange since 2007.
But the Chinese company is currently under mounting pressure to streamline its investment portfolio to reduce debts after years of aggressive acquisitions to expand its global empire.
Concerned with its liquidity crunch, Moody’s Investor Service, a global credit rating company, cut Fosun’s debt rating from Ba3 to B1 last year, with a warning that the Chinese conglomerate wouldn't be able to repay short-term debts maturing in the next 12 months.
Fosun refuted this, but its divestments of investment assets have gathered pace since last year to secure funds to repay debts, including a 60% stake in Nanjing Nangang Iron & Steel United Co. for 13.58 billion yuan ($1.86 billion) and a minority stake in Alibaba Group’s logistics arm Cainiao for over $1 billion.
Nature&Nature, founded in 2011, has expanded its presence in the Korean beauty care market with a focus on the country’s TV home shopping channels to sell its beauty care products.
It reported 23.7 billion won in operating profit on sales of 131.1 billion won in 2022.
It has been seeking to go public but the IPO process is well behind its initial schedule.
