Hillhouse, CDH to acquire Belle in $6.8bn take-private

The Chinese firms have pledged to revive sales of the Shenzhen-based shoe company, which has been battered by growing e-commerce platforms in the country.

Chinese private equity firms Hillhouse Capital Group and CDH Investments have agreed to buy Chinese footwear and apparel company Belle International in a deal valuing the company at HK$53.1 billion ($6.8 billion; €6.2 billion).

Hillhouse and CDH are acquiring the company alongside Belle directors Yu Wu and Sheng Fang, offering HK$ 6.30 per share, which represents a 20 percent premium to the company’s last trading price, the company said in a statement.

The company’s new owners are aiming to revive sales after its footwear segment experienced “unprecedented challenges” because of rapidly growing e-commerce platforms in China. Belle has seen 13 consecutive quarters of negative same store sales growth since the fourth quarter of financial year ended February 2014.

With the investment, Hillhouse and CDH plan to explore and experiment with new retail models, pursue a series of transformative and innovative initiatives, and make significant investments in technology, infrastructure and talent.

Commenting on the deal, Zhang Lei, founder and CEO of Hillhouse, said: “We believe Hillhouse’s long-term capital base combined with our digital and operating experience will be able to help Belle International implement the necessary changes needed to revive its business for the Internet era.

Following the completion of the transaction Hillhouse will hold 56.8 percent of the company, while CDH will hold 12 percent. Meanwhile, other participating management, including Yu and Sheng will own 31.1 percent of Belle.

Hong Kong-listed Belle is a shoe and apparel retailer with more than 20,000 outlets in mainland China and over 100 outlets in Hong Kong and Macau. Its company-owned footwear brands include Belle, Staccato and Joy & Peace, and also distributes international brands such as Bata, CAT, Clarks and Hush Puppies.

Beijing-based CDH previously held stakes in Belle, acquiring the company in September 2005 and took it public two years later.

The firm did not disclose from which fund the current investment was made. CDH is, however, in the process of deploying its latest China mid-market fund, which raised $800 million against a $600 million target in January this year. CDH manages five US dollar-denominated funds and two yuan-denominated funds with total assets under management of over $10 billion.

Hillhouse, also based in Beijing, invests in consumer, TMT, healthcare, advanced manufacturing, financials and business services companies across all equity stages. In January this year, the firm invested $250 million in California-based e-commerce company Magento Commerce. The firm manages over $25 billion of assets and is backed by institutional investors including Yale University Endowment, foundations, sovereign wealth funds and family offices, according to PEI data. 

Hillhouse also declined to disclose from which fund it structured its investment in Belle.