Suning.com, one of the largest retailers in China, has planned to team up with Guojun Capital, a private equity unit of Chinese securities firm Guotai Junan Securities, to launch a fund of funds with a target size of RMB10 billion (US$1.48 billion), the retailer announced on Tuesday.
Dubbed as "Guotai Junan Innovation Equity Investment Fund of Funds" in Chinese, the new fund will seek investment opportunities in industries including advanced equipment manufacturing, new generation of information technology, medical treatment and healthcare, new energy, consumption, and modern service, said the Shenzhen-listed Suning.com in an announcement filed with the stock exchange. The fund will directly invest in portfolio companies, and make investments through capital injection into other funds.
According to the announcement, Suning.com will serve as a limited partner to pour RMB500 million (US$74.20 million) into the fund, while Guotai Junan Innovation Investment, a wholly-owned affiliate of Guotai Junan Securities, will inject RMB1.99 billion (US$295.33 million) as a limited partner. Guojun Capital, as a general partner, will invest RMB10 million (US$1.48 million).
The new fund came after Suning International Group, a subsidiary of Suning.com, announced in January 2019 to contribute US$50 million to launch a fund called "Yunfeng IK Co-Invest" with Yunfeng IK Co-Invest GP, an investment vehicle of Chinese billionaire Jack Ma’s private equity firm Yunfeng Capital.
Founded in 1990 in eastern China’s Nanjing city, Suning.com offers a wide range of products through its brick-and-mortar stores including computers, digital cameras, mobile phones, office equipment, and home appliances. The company has a strong presence in the Chinese household appliances market.
Statistics from Chinese industrial research firm AskCI shows that the sales volume in the Chinese household appliances market reached RMB1.82 billion (US$271.85 million) in the third quarter of 2018. Offline sales volume, which accounted for 60%, was mainly contributed by Suning.com (17.5%), GOME Electrical Appliances (9%), and Jiangsu Five Star (2%).