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Li & Fung sells stake in logistics firm for $300m

Singapore-based investment company Temasek has agreed to acquire a 21.7% stake in Li & Fung-owned company LF Logistics for $300m (£236m).

The investment values LF Logistics at approximately $1.4bn (£1.1bn) on a post-money equity valuation basis.

The money will be used to fund future capital expenditure at LF Logistics, repay existing bank facilities and accelerate its growth. A proposed spin-off IPO of the company will be postponed until further notice.

Li & Fung will remain a controlling shareholder of LF Logistics with a 78.3% stake.

Joseph Phi, group president at Li & Fung, said: “We expect the strong growth of LF Logistics to continue. With operations in all of Asia’s fastest growing cities, we are well positioned to capitalize on rising middle class consumption and our early investment in e-logistics allows us to enjoy first-mover advantage.”

Spencer Fung, group CEO, added: “The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung’s capital structure and financial flexibility.”

Li & Fung reported a 20% decrease in core operating profit to $285m (£216m) for the year to 31 December 2018.

Turnover decreased by 6.2% to $12.7bn (£9.6bn), mainly as a result of customers’ ongoing destocking, customer turnover and bankruptcies. Adjusted profit attributable to shareholders decreased 15.9% to $117m (£88m).

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