Belle Fashion, known as the "King of Shoes", recently submitted an IPO application to the Hong Kong Stock Exchange again.
On March 1, Belle Fashion Group submitted a statement to the Hong Kong Stock Exchange, with Bank of America and Morgan Stanley as joint sponsors.
According to public information, Belle Fashion is a large fashion footwear and apparel group, formerly known as Lihua Shoes, founded in Hong Kong in 1981, and was once the largest women's shoe retailer in China by retail sales.
In fact, Belle is not a new face in the capital market.
In 2007, Belle International (the former parent company of Belle Fashion) was listed on the Hong Kong Stock Exchange, and its market value once exceeded 150 billion Hong Kong dollars in 2013, which can be called the "generation of shoe king". In 2017, Belle International was officially privatized and delisted from the Hong Kong Stock Exchange, with a market capitalization of about HK$53.1 billion at the time of delisting.
However, the "shoe king", which has been delisted for seven years, has made a comeback this time and once again launched an impact on the capital market.
Privatization and delisting were a sensation
When it comes to Belle, its sensational privatization and delisting cannot be avoided. The HK$53.1 billion ** created the largest privatization transaction in the history of the Hong Kong Stock Exchange at that time.
In the prospectus, Belle Fashion disclosed the beginning and end of the previous delisting.
During the approximately 10-year period of its listing on the Main Board of the Stock Exchange, Belle International's principal businesses included the Group's business and the sports footwear and apparel retail business.
Since 2014 and up to privatization, the performance of the Group's footwear business has declined significantly, which is also the main part of Belle International's operating profit**. In addition, the weak performance of the Group's footwear business led to a continuous decline in Belle International's overall financial performance.
Faced with such a difficult operating environment, Belle International decided to carry out a fundamental transformation of the entire business.
This fundamental transformation requires Belle International, especially the Group's footwear business, to take a series of transformation and innovative measures, if Belle International remains a listed company, by its nature, it may be affected by the short-term disruptions and pressures of the public market, and this transformation will be difficult to be effectively implemented and may have additional risks.
Based on this, Belle made the decision to delist.
At the end of April 2017, Belle International introduced Hillhouse and CDH to privatize and delist Belle International at a valuation of HK$53.1 billion. On July 27 of the same year, the shares of Belle International were delisted on the Stock Exchange.
After the split and reorganization, the sports sector has been listed
After the completion of the privatization and delisting, Belle International underwent a business spin-off and restructuring.
First of all, the growing sports business line was packaged into Taobo. In 2019, Taobo successfully landed on the Hong Kong Stock Exchange, and its market value once reached HK$57.4 billion on the first day of listing, even exceeding the market value of HK$53.1 billion when Belle International was privatized and delisted in 2017.
The remaining footwear business of Belle International has been incorporated into today's Belle Fashion. So, how does Belle Fashion perform after the split transformation?
According to the prospectus, Belle Fashion has reached the first stage of transformation and its performance has grown steadily. For the nine months ended November 30, 2023, the company's revenue was 16.1 billion yuan, a year-on-year increase of 128%；net profit was 2.1 billion yuan, a year-on-year increase of 927%；Net profit margin reached 128%, which is the highest level in the same period in the past.
According to Frost & Sullivan, Belle Fashion is China's leading fashion trend company and the largest fashion footwear company in terms of retail sales in 2022.
In fact, Belle Fashion's share of China's fashion footwear market has ranked first in terms of retail sales for more than ten consecutive years, and its market share will further expand to 12 in 20223%, much higher than the second-ranked company.
At present, Belle Fashion operates 19 core self-owned brands and cooperative brands, including belle, tata, staccato, 73hours, joy&peace, basto, toomanyshoes, which are positioned in fashion. Functional casual skap, hush puppies, bata, senda; Athleisure, TeenMiixHampion, Cat, Ellesse, and trendy OGR, Initial, Moussy, and Sly, cover women's, men's, and children's footwear, apparel, and accessories.
As of November 30, 2023, Belle Fashion has 8,361 directly-operated stores and tens of thousands of store employees in more than 300 cities in China.
Hit the IPO twice in three years
In fact, this is not the first time Belle Fashion has submitted an application. In 2022, Belle Fashion submitted a prospectus to the Hong Kong Stock Exchange, but it was unsuccessful.
Hit the IPO twice in three years, what does Belle Fashion want to do?
Zhang Lei, the founder of Hillhouse Capital, said in his investment experience "Value" that investing in Belle was a "triple return" transaction.
There are three points of logic: first, the transaction is cheap, and there is a certain arbitrage space; Second, the sports shoes and apparel sales business is a high-quality asset, but it is dragged down by the women's shoes business, and the value is huge after the spin-off; Third, the digital transformation of traditional services can enhance business value.
This so-called "triple return" was once very successful, especially after the spin-off of Taobo in 2019. Its listing price is 85 Hong Kong dollars shares, the peak market value has exceeded 70 billion Hong Kong dollars. However, at present, Taobo's share price has fallen below the issue price, and as of March 6, 2024, Taobo's total market capitalization is 336HK$7.3 billion.
Obviously, promoting Belle Fashion's listing and allowing shareholders to really make money through the secondary market is another important part of the "triple return" goal.
According to the prospectus, as of the listing, Wise Ventures held 46 shares in Belle Fashion36%, and Hillhouse's shareholding ratio is 4448%, while CDH Investments' SCBL holdings are 916%。The ultimate beneficiary of Wise Entrepreneurship is the management shareholder.
A generation of shoe kings hit the IPO again, what will be the result? We'll see.
Xiaoxiang Morning News reporter Luo Yaqi.
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