Chinese billionaire entrepreneur and Olympic champion Li Ning is considering taking his namesake sportswear company private from the Hong Kong stock exchange, four people said, adding to a string of such potential deals in a faltering market.
Li is considering leading a consortium to buy out Li Ning Co Ltd, which had a market capitalisation of HK$52.85 billion ($6.8 billion) as of Monday, said the people, who have knowledge of the matter.
Li, 61, founded Li Ning Co a few years after retiring from a decorated gymnastics career in 1988. He owns slightly more than 10% of the company, its 2023 interim report showed.
A number of global and regional private equity firms, including TPG, PAG and Hillhouse Investment, have been tapped to see if they are interested in joining as an investor, two of the people said.
The discussions to take Li Ning Co private are in the early stages and details have not been finalised, said the sources, who declined to be identified as the information was confidential. Li Ning made its Hong Kong debut in 2004.
The company’s shares jumped as much as 19% to HK$24.3 following the Reuters report – their highest since November.
Beijing-headquartered Li Ning Co said in a response to Reuters that it had “not received any information regarding this matter as of now.”
Li did not immediately respond to a request for comment sent via the company.
TPG, PAG and Hillhouse declined to comment.
Stock markets in Hong Kong and Mainland China have tanked over the past year amid China’s economic slowdown, a lack of strong stimulus policies, and geopolitical tensions.
Hong Kong’s Hang Seng index slumped 14% in 2023, while China’s benchmark CSI 300 index fell 11%.
Li feels his company is undervalued in Hong Kong and would target a hefty premium over its current share price in a potential buyout, two of the sources said.
He did not have an imminent plan to relist his company back home, one of them added.
Li Ning Co was the worst-performing blue-chip stock on the Hong Kong bourse in the past year, down 68% as of Tuesday, LSEG data showed. That compares with a 25% drop in main rival Anta Sports.
Li was regarded as China’s “gymnastics prince” after winning six of the seven gold medals at the 1982 World Cup Gymnastic Competition, and carried on to win six medals at the 1984 Los Angeles Olympic Games.
Li Ning Co said in December it would buy a Hong Kong commercial and retail property from Henderson Land for HK$2.21 billion as its Hong Kong headquarters, which sent its shares to a three-and-a-half-year low on the day of the announcement.
Li also said at the time he planned to repurchase up to HK$3 billion value of shares from the open market in the next 6 months, his first such move in its corporate history, according to Citigroup analysts.
In the announcement, the company’s board said it believed its current share price was “below its intrinsic actual value.”
($1 = 7.8193 Hong Kong dollars)
Reuters