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Li & Fung targets wholesalers with its US$1bn fund

Li & Fung Ltd (利豐), the biggest supplier of clothes and toys to Wal-Mart Stores Inc and Target Corp, said it was considering acquisitions of several US companies with hundreds of millions of dollars in annual sales.

“We’ve never seen so many great opportunities,” president Bruce Rockowitz said in an interview in New York on Friday. “It’s almost unprecedented.”

The company has a US$1 billion acquisition fund, and is eyeing “multi-hundred-million-dollar-sales companies” in the US, he said. Li & Fung may make “a series of acquisitions” within the coming months, and is also looking at companies in Europe and in Hong Kong, he said.

Li & Fung, founded in China in 1906 near the end of the Qing Dynasty, is accelerating efforts to buy makers of clothing, cosmetics, home products, accessories and shoes while retailers are step up reordering to meet growing demand. The company is looking for wholesalers, not merchants, Rockowitz said.

Trinity Ltd (利邦), a unit of the supply-chain specialist’s closely held parent Li & Fung Group, is selling shares in a Hong Kong initial public offering, according to a term sheet sent to investors by the sale’s arrangers.

The Trinity offering will consist of 452 million new and existing shares, the document said, without providing a price. The Hong Kong Economic Journal on Saturday reported Trinity intends to raise as much as US$150 million in an initial public offering.

Li & Fung fell 3.2 percent to HK$31.60 (US$4.08) at 11:25am in Hong Kong trading yesterday, making it the biggest loser on the benchmark Hang Seng Index. Yesterday’s drop trimmed the stock’s gain to 138 percent this year, compared with a 49 percent gain for the Hang Seng.

Since last month, there had been a “marked difference” at retailers, Rockowitz said.

“People are restocking their closets now because they haven’t bought in a long time,” he said. Kohl’s Corp has had “a tremendous amount of reorders” over the last two months, he said.

Sales at US chains open at least a year rose 1.1 percent last month, the first increase in 13 months, as results at American Eagle Outfitters Inc and Kohl’s topped analysts’ estimates and discounts drew shoppers back to stores, Swampscott, Massachusetts-based Retail Metrics Inc said.
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