Category: Uncategorized

Citywire | 30 January 2020

Asian private equity firm LionRock Capital has opened an office in Zurich.

Zurich was an obvious choice for the firm’s first office in Europe, said LionRock’s head of Europe Tom Pitts.

‘It seemed sensible for logistics. It’s three hours to Italy by train and it works comfortably with the tax regime. In retrospect, it’s been a really great move,’ he said.

Italy, where the firm owns 30% of football team Inter Milan, is an important market for LionRock, but Pitts is also open to Swiss investors, both as potential sources of investment and to contribute to their investment strategies.

He said: ‘Something that surprised me is the depth of conversation around potential for co-investment.

‘By virtue of the sorts of companies we look at there are a number of European family offices that have a history of retail and sport that have looked for ways to get involved.

‘I think the way we tend to invest is we like that council of wise men. The more people that look critically around our investment thesis the better. I guess part of having a presence here is that you get enquiries, although that’s not why we made the move to Switzerland.’

The firm already had offices in Hong Kong and Shanghai.

Pitts says that the company’s partnership with Chinese sporting goods tycoon Li Ning, who is LionRock’s non-executive chairman, is valuable to European investors. Ning’s company, which recently launched a fund with LionRock, has 60,000 employees in China.

‘There’s lots of families that have backgrounds in retail. This is an attractive proposition for them. They come into an ecosystem that puts them closer to China, not only as an investment for them but also they can take advantage of our access to further their own business aspirations.

‘Li Ning gives us our edge. He is the Nike of China. To have a lens like him around what the approach of the Chinese consumer is, is invaluable,’ he said.

Pitts added that LionRock’s main interest in Europe is to expand its investment in European sporting brands.

‘There are so many wonderful young companies and older companies that point of growth where they start thinking about an Asian strategy,’ he said.

Asian Venture Capital Journal | 05 July 2019

LionRock Capital, an Asian PE firm that counts Italian football club Inter Milan among its previous investments, has launched a sports-focused fund with retailer Li Ning participating as an anchor LP. 

The plan is to target brands at the nexus of consumer and sports – such as clothing, shoes, accessories and food and beverage – that have growth potential in China. Li Ning, the country’s largest sportswear retailer with RMB10.5 billion ($1.5 billion) in annual revenue and 7,000 stores, will share its distribution expertise. Further input will come from other, unnamed strategic investors that have large operating platforms in China, said Daniel Tseung, LionRock’s founder. 

“A lot of the companies we are talking to are not that visible in China, so it’s attractive to them,” Tseung added. “For example, there are businesses in Europe that have been around for a long time but have limited growth prospects in their home markets. They would love to come to China for the consumer growth story.” 

The target size of the fund – and Li Ning’s contribution to it – have yet to be announced. As part of the arrangement, Li Ning himself, the Chinese Olympic gymnast who established the company that bears his name, will serve as non-executive chairman of LionRock. 

LionRock currently has more than $750 million under management across one fund, currently in divestment mode, and several special purpose investment vehicles. Most of its LPs are entrepreneurs and family offices from around the world. The firm was established by Tseung in 2011 after a 10-year stint with the PE division of Hong Kong-based conglomerate Sun Hung Kai Properties. 

Investments are flexible in nature, moving between equity, convertible debt, rollover debt and other instruments much like a special situations fund. However, they all follow a broad China consumer theme, with sports brands, new economy, food and beverage, and healthcare all represented in the portfolio. Li Ning is not the firm’s first strategic partnership within sports. 

In 2018, LionRock invested in Suning Sports, which holds the Chinese media rights to a range of sporting competitions, including England’s Premier League, Spain’s La Liga, Italy’s Serie A, Germany’s Bundesliga, and France’s Ligue 1. It participated in a $600 million Series A round led by Goldman Sachs and Alibaba Group that valued the business at more than RMB10 billion. 

“On a macro level, we took the view that the US has a media empire in ESPN and Europe has Sky Sports, but China doesn’t have that type of platform,” Tseung explained. An increasing amount of capital is now entering the space, with iQiyi Sports – a spin-out of Baidu-backed streaming platform iQiyi – launching not long after the Suning Sports round was announced and signing up its own PE backers. Tencent Holdings has its own platform, which owns the China rights to NBA basketball. 

Suning is primarily an electronics retailer – it has more than 11,000 stores and generated revenue of RMB336 billion in 2018 – but the company is one of several Chinese strategic players looking to expand into complementary consumer verticals, such as media, and sports, with a view to engaging with consumers more effectively and driving core business activities. 

Suning became the majority owner of Inter Milan in 2016, buying a 69% stake from Erick Thohir, an Indonesian media tycoon who led an acquisition of the club in 2013, and longstanding shareholders the Moratti family. This ultimately led to another investment opportunity for LionRock, which earlier this year acquired Thohir’s remaining 31% interest. 

Inter Milan is one of numerous European football clubs now under Chinese ownership, although arguably one of few where there is a clear strategic rationale. “It is a unique platform. You can’t replicate any of these football clubs, they are special,” Tseung said. “We had already partnered with Suning on a previous deal and we thought it was a great opportunity to invest.” 

He is similarly bullish about the broader outlook for sports in China, especially given the government’s ambition to turn it into an industry worth RMB5 trillion by 2025. “Ever since the 2008 Beijing Olympics, it’s been a good industry to be in,” Tseung added. “The government is supportive, and parents are spending more money on education, healthcare and sports for their kids. There is a big opportunity in consumption around that.”

From CaixinGlobal

By Wang Luyao, Liu Yanfei and Yang Ge

Shares of Jinxin Fertility Group Ltd., China’s largest private provider of in vitro fertility (IVF) services, posted strong gains in their Tuesday trading debut in Hong Kong, boosted by positive sentiment toward a sector with big growth potential.

The IVF specialist has found a strong niche providing reproductive services to a growing Chinese middle class that can increasingly afford such services. The company’s IPO shares priced at the top of their range at HK$8.54 ($1.09), helping the company to raise HK$2.8 billion. The shares jumped as high as 25% above their offering price shortly after trading began, but lost steam later in the day and ultimately closed up about 9%.

The company sold about a third of its IPO shares to four cornerstone investors, including health care investment specialists Ally Bridge Group and OrbiMed. Other early investors include Sequoia Capital and drugmaker WuXi AppTec.

Jinxin is one of only about 30-plus privately owned holders of licenses to provide IVF services in China, with the big majority of the roughly 470 licensees nationwide coming from the state-run sector. The company, which has a market value of about HK$22 billion, estimated its license as an asset is worth about 400 million yuan ($58 million).

With operations dating back to 2003, Jinxin Fertility is part of the larger Jinxin Group, a provider of health care-related products and services based in the interior city of Chengdu, Sichuan province. It was rated third in China’s assisted fertility market in 2018, and No. 1 among privately owned players with about 3.1% of the IVF market, according to its previously filed prospectus.

The company earns the lion’s share of its revenue by providing fertility services from its own facilities in China, and moved into the U.S. late last year with the acquisition of a couple of facilities in California. In its prospectus the company pointed out the broader market for fertility services in China is growing quickly. In 2017 the country had about 47.7 million infertile couples, and the number is expected to grow to 56.2 million by 2023.

Jinxin said its revenue rose nearly 40% last year to 921 million yuan, while its adjusted profit grew at a slower 25% to 250 million yuan.

The listing is the latest in Hong Kong by a growing wave of medical-related companies from the Chinese mainland, including providers of drugs, devices and services. Many of those are thriving on China’s growing middle class, as well as Beijing’s broader effort to ensure that all of the country’s 1.4 billion people have access to basic health services