Li & Fung plans perpetual bonds to help fund acquisitions

Wed Oct 31, 2012 10:30pm EDT

* Li & Fung to finalise size, pricing after book-building

* Li & Fung bonds to be listed in Singapore

* Li & Fung raising funds for overseas acquisitions

HONG KONG, Nov 1 (Reuters) - Li & Fung Ltd, a manager of supply chains for global retailers including Wal-Mart Stores Inc and Target Corp, plans to raise funds through U.S. dollar-denominated perpetual bonds to help fund overseas acquisitions.

Li & Fung, which gets about 80 percent of its sales from Europe and the United States, said it would finalise the size and pricing of the bonds after a book-building process.

The securities would be listed on the Singapore stock exchange, the company said in a statement on Thursday.

Li & Fung is halfway through an ambitious three-year growth plan that aims to expand its profit partly through purchases of overseas assets. The company last month appointed Ed Lam, who previously headed Citigroup Inc's Hong Kong investment and banking division, as its chief financial officer to help advise the company on acquisitions, fund-raising and trade finance.

First-half core operating profit slumped 22 percent to $221 million, hit by sluggish demand from its key markets. The drop has prompted some analysts to question whether the company's acquisition-led business model still works and to wonder where it will get its future acquisition funding from.

Last month, a source said Li & Fung was in advanced talks to buy Synergies Worldwide, a small New York-based supplier, to help the Hong Kong company gain a better foothold in the fast fashion and discount clothing space - the two segments that have been doing well in the brittle economy in the United States.

Suppliers like Li & Fung and Synergies act as middle men, working with manufacturers of apparel, toys and furniture to manage the flow of products to retailers.

Citigroup Global Markets Ltd and The Hongkong and Shanghai Banking Corp Ltd are the joint lead managers for the offering.

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