Li & Fung is working its way to creating the supply chain of the future by building up the logistics to support it.
The Hong Kong-based supply chain solutions company announced Friday a new $300 million investment from Singapore-headquartered investment company Temasek for a 21.7 percent stake in its LF Logistics business. Li & Fung will remain the controlling shareholder.
Li & Fung said it will use the infusion of funds to accelerate business growth initiatives for LF Logistics, for future capital expenditures and to repay existing bank facilities.
“The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth,” Li & Fung Group CEO Spencer Fung said. “It will also enhance Li & Fung’s capital structure and financial flexibility. Our strong operating cash flow and solid balance sheet provides us with ample liquidity to fund future growth and complete our transformation efforts, as we execute our Three-Year Plan goal of creating the Supply Chain of the Future.”
Owing to the investment, the company has postponed “until further notice” the proposed spin-off of its logistics business, which it had started prepping for earlier this year in light of what Li & Fung group president Joseph Phi called “strong organic growth.”
“At Li & Fung, we are well positioned to integrate logistics with our traditional sourcing and supply chain solutions offering. This provides a faster and more digital supply chain, enabling us to cultivate closer and longer-lasting customer partnerships. We are pursuing market share gain and pipeline conversion as the twin drivers for our growth,” Phi had said in March.
On Friday, Li & Fung said LF Logistics has achieved multiple-year double-digit organic growth, thanks in part to robust growth in China, the e-logistics boom, accelerated development in the ASEAN region, plus further expansion in places like Japan, Korea and India.
“We expect the strong growth of LF Logistics to continue,” Phi said Friday. “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. Our logistics strength combined with Li & Fung’s sourcing and new digital supply chain solutions, represents a unique end-to-end offering that encompasses the entire value chain.”
In a statement, Li & Fung said the investment values LF Logistics at $1.4 billion.