Li & Fung and South Ocean are joining forces to create a global knitwear empire.
On Thursday, Li & Fung announced a joint venture with South Ocean Knitters Holdings Limited, a Hong Kong-based knitwear exporter. Dubbed Cobalt Fashion Holding Limited and worth roughly $700 million, the JV will merge the operations and resources of Li & Fung’s sweater vertical with South Ocean’s knitwear business to become one of the world’s largest knitwear suppliers.
“We are excited to join forces with South Ocean. We both have a long history and solid track record, with a strong foundation of product innovation and expertise,” Li & Fung Group chairman William Fung said. “Given our access to the world’s leading fashion brands and retailers, we have first-hand insight into how knitwear and its supply chain can be transformed to best suit today’s fast-changing apparel market.”
[Read more on Li & Fung’s business initiatives: Sourcing Scoop: An Exclusive Look at How Li & Fung’s Spencer Fung Plans to Transform Fashion]
Under the JV, Li & Fung and South Ocean will leverage their knitwear strengths. Li & Fung, which will own 62 percent of the JV, is known for its established sweater vertical and supply chain innovation. South Ocean, which will own the remaining 38 percent of the JV, will use its expertise in manufacturing and yarn development to elevate the JV’s knitwear offering. Cobalt Fashion Holding will service brands and retailers worldwide, spanning the U.K., U.S., Europe and other Asian markets.
Silas Chou, CEO and president of South Ocean’s parent company, Novel Enterprises Limited, said the JV serves as an important milestone for the global knitwear sector.
“South Ocean is one of the most established knitwear companies in Asia with over 40 years of experience in supplying the world’s top brands and retailers with beautiful, functional and innovative knitwear. We see tremendous synergies in the joint venture with Li & Fung,” Chou said. “Together, we will be driving innovation in the industry and delivering value to our customers.”
Once necessary regulatory approvals are obtained, both parties will close the transaction and commence operations of the JV.