Chinese-Israeli fund Infinity Private Equity is on to a very good thing. At the end of last week, Chinese company Baozun filed a revised prospectus for a Nasdaq IPO. The company is seeking a company value of $1.8-2.1 billion for the issue, at a share price of $12-14.
Two years ago, Infinity invested a few million dollars in the Chinese company at a company value of only $100 million, and currently holds 6.6% of its shares. At the price range being sought, Infinity's shares are worth $89-104 million.
Baozun is planning on raising $132-177 million, depending on the share price and whether the underwriters exercise their option to buy shares after the offering. The underwriters for the issue are Morgan Stanley, Credit Suissse, and Bank of America-Merrill Lynch. According to figures from Nasdaq, the Baozun IPO is slated to take place next week, probably on Thursday. Following the offering, the company share will be traded under the BZUN ticker symbol.
Shareholders in Infinity include Clal Industries and Investments Ltd. (TASE: CII), formerly of the IDB group, and currently controlled by businessman Len Blavatnik. Amir Gal-Or is a founding and managing partner.
Infinity invests in companies that it believes have potential for becoming market leaders in China by leveraging their technological knowhow. Last year, the fund scored a success when Wafer Level Chip Scale Package (WLCSP), a subsidiary of Chinese-Israeli company Shellcase (in which the fund is a key investor) dealing in chip protection, held an offering on the Shanghai exchange at a company value of $780 million.
Representative of Nike and HP in China
In its amended prospectus, Baozun explains that it plans to allocate $32 million of the money it raises for marketing and sales, $26 million for R&D and technological infrastructure, and $13 million for expanding its warehouses and the physical infrastructure necessary for its business.
Founded in Shanghai in 2007, Baozun provides logistics services for e-commerce. It represents international brand names in China, such as HP and Haagen Dazs. These companies wish to outsource at least some of their online business, and Baozun assumes responsibility for the logistical, marketing, making connections, and strategy in this area.
According to figures published by the company, the e-commerce market for brand name companies in China has grown from $4 billion in 2010 to $129 billion in 2014 - average annual growth of 145.7% - and expectations are that the market will reach $379 billion in 2017. The market for accompanying services for e-commerce in brand names is expected to grow from $4 billion in 2014 to $16 billion in 2017.
The largest shareholder in Baozun is Chinese Internet giant Alibaba, which held 23.5% of Baozun's share capital before the offering.
Baozun's revenue totaled $255 million in 2014, and the net loss attributed to its shareholders was $25.1 million.
Published by Globes [online], Israel business news - www.globes-online.com - on May 17, 2015
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