The sale of equity to Bank of Nanjing and BNP Paribus has bolstered the coffers of China’s once-thriving retail and e-commerce titan and held out hope for its recovery from the worst crisis in decades
Debt-ridden Suning.com (002024.SZ), one of China’s largest retail and e-commerce giants, announced on March 8 that it would sell 36% and 3% of Suning Consumer Finance to Bank of Nanjing and BNP Paribas respectively. After the transaction is completed, Bank of Nanjing will replace Suning.com as the largest shareholder of Suning Consumer Finance.
According to the announcement, on March 4, Bank of Nanjing invested CNY340.56 million (USD53.63 million) to purchase a 36% stake in Suning Consumer Finance held by Suning.com. BNP Paribas shelled out CNY28.38 million to buy a 3% stake in Suning Consumer Finance held by Suning.com. The total value of the transaction is about CNY369 million.
Bank of Nanjing announced on the evening of March 7 that it purchased a 5% stake in Suning Consumer Finance held by Jiangsu Yanghe Brewery Joint-Stock (002304.SZ) on March 4.
After the equity transfer, Bank of Nanjing will become the largest shareholder of Suning Consumer Finance, with its shareholding ratio increasing from 15% to 56%. BNP Paribas' stake increased from 15% to 18%, making it the second-largest shareholder.
Suning.com's shareholding ratio dropped from 49% to 10%, becoming the fourth-largest shareholder. Meanwhile, Simcare Jiangsu Pharmaceutical came in third, with 16% of the consumer finance arm of Suning.
As of June 30, 2021, Suning Consumer Finance posted a revenue of CNY105.8 million and a net loss of CNY34.01 million.
According to preliminary calculations by Suning.com's financial department, this transaction is expected to increase its net profit by about CNY75 million, and will not have a significant impact on the company's current financial position and operating results.
According to Suning.com, this equity transfer can optimize the equity structure of Suning Consumer Finance, improve its operational capabilities and sustainable development capabilities, and conform to the overall development strategy of Suning Consumer Finance.
Suning.com encountered a liquidity crisis last year. A group of entities, including the government of Jiangsu Province, where the company is headquartered, the city of Nanjing Government, strategic investors, and leading banks all provided help to bail Suning.com out of its liquidity crunch.
According to Suning’s financial statements for Q3 2021, when data was last available, the company racked up a debt to the tune of CNY141.2 billion.
In July last year, the state-owned assets watchdog of Jiangsu Province guided Suning.com for a new round of strategic investment.
In August, the embattled firm obtained tens of billions of yuan in credit line from Bank of Jiangsu, Bank of Nanjing, China Construction Bank, Agricultural Bank, Bank of China and other banks. This move has further enhanced Suning.com's retail services and supply chain capabilities.