A wholly-owned subsidiary of Suning.com, one of the largest non-government retailers in China, announced on Thursday it entered into an agreement with Jack Ma-backed investment firm Yunfeng Capital to launch a private equity fund with an aim to raise up to US$2.5 billion.
The Suning.com subsidiary agreed to pour as much as US$210 million into the new fund, "Yunfeng Investment III," as a limited partner. The company already paid 61.41% of the subscribed capital contribution, said Suning.com in a statement filed with the Shenzhen stock exchange. The fund would also see the participation of other limited partners.
"To further promote the application of our smart retail business strategy, and enrich the company’s retail ecology, Suning.com has enhanced cooperation with professional investment institutions to realize industry synergy, and earn financial returns at the same time," said Suning.com in the statement.
The capital commitment came as the retail giant, which already has a strong presence in the Chinese offline retail sphere, is ramping up efforts to foray into the smart retail segment. In its previous cooperation with Yunfeng Capital in January 2019, the company agreed to contribute US$50 million to jointly launch a fund named "Yunfeng IK Co-invest."
The company also announced a partnership with Guojun Capital, a private equity unit of Chinese securities firm Guotai Junan Securities, in April 2019 to introduce a fund of funds with a target size of RMB10 billion (US$1.48 billion). The fund would invest in industries including advanced equipment manufacturing, the new generation of information technology, medical treatment and healthcare, and new energy.
Suning.com, established in 1990, is the largest offline retailer in the Chinese household appliances market. Through brick-and-mortars stores and online platforms, the company offers a wide range of products including computers, digital cameras, mobile phones, home appliances, and office equipment.
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%).