Hong Kong-listed Chinese sportswear juggernaut Li Ning Company has tied up with venture capital firm HongShan, previously known as Sequoia Capital China, to form a joint venture (JV) tapping into the development and operation of Li Ning’s brand business overseas.
Li Ning, the executive director and joint chief executive officer, and his eponymous listed firm will together hold a 55% stake in the JV through two separate subsidiaries, LN Co and Founder Co; while HongShan will hold 45% interest through two of its entities, HongShan Venture and HongShan Motivation, upon the completion of new shares subscription, according to an exchange filing on Tuesday.
With a total capital contribution of $20 million ($25.7 million), the JV is set to help the Chinese sports brand expand into international markets, especially those markets located in the Belt and Road regions, per the filing.
“This requires the establishment of a new framework with an independent team, rich in overseas resources and experience, to take responsibilities of developing the international business operations with clear business and financial objectives,” the listed firm said in the filing, adding that it expects to tap HongShan’s investment experience and cross-border investment networks through the JV.
But the sports brand firm noted that LN Co has the option to acquire all the JV shares from HongShan Co in the future so as to realise the firm’s control over the British Virgin Islands-registered JV.
The JV formation comes at a time when the sports brand giant recorded almost 2 billion yuan ($281.1 million) in net profit in the first half of 2024, down by 8% compared to the same period last year; while its revenue recorded a 2.3% growth compared to the first half of 2023, according to its interim results published in August.