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By Kennix Chim
HONG KONG, May 8 (Reuters) - France’s LVMH Moet Hennessy-Louis Vuitton (LVMH.PA), the world’s largest luxury goods group, plans to buy US$30 million worth of initial public offering shares in China’s Belle International Holdings, according to a deal prospectus.
Belle, which is China’s largest retailer of women’s shoes, aims to raise up to US$1.1 billion to help fund an expansion plan that will see it add roughly 1,000 outlets a year in China.
“In the coming years, the company will depend on organic growth but will not rule out buying opportunities,” Chief Executive Sheng Baijiao told reporters by videoconference from London, where he was on an investor roadshow ahead of the firm’s May 23 listing in Hong Kong.
He said the company intended to cooperate with LVMH but gave no details.
The French firm’s iconic Louis Vuitton-branded bags are much coveted — and counterfeited — in mainland China.
China, whose economy grew by 11.1 percent in the first quarter on an annual basis, is on track to become the world’s No. 2 consumer market by 2015, according to a recent Credit Suisse report.
Investors seeking to tap surging consumer spending have been crowding into mainland retail stocks, while global retailers are ramping up operations in the fragmented and highly competitive market.
Belle operates more than 3,800 stores in China, where it has an estimated 8.2 percent market share. The company has 35 stores in Hong Kong, Macau and the United States.
The company said it plans capital expenditure this year of 883.9 million yuan (US$114.9 million), an increase of about 15 percent from 2006, mainly to increase its retail outlets and lift its production capacity.
In addition to women’s shoes, Belle is also one of the largest sportswear retailers in China’s high-growth domestic market, distributing brands including Nike (NKE.N). Its offerings include six self-owned brands.
Belle’s IPO is being handled by Credit Suisse CSGN.VX and Morgan Stanley (MS.N). (US$=HK$7.8)