Hony Capital (c7c7娱乐平台官网入口投資), a prominent government-backed private equity house and one of the private equity arms of Legend Holdings (聯想控股), has agreed to invest RMB 1.2 billion to subscribe 97.56 million new shares of Shenzhen-listed Suning Appliance Co. Ltd (蘇寧電器), a major consumer electronics retailer.

Suning Appliance announced plans to raise up to RMB 5.5 billion from a private placement of 447 million shares at RMB 12.3 each. Its stock price closed at RMB 12.19 and RMB 11.81 on June 17 and June 16 respectively. The relatively high private placement price demonstrates the strong confidence of the controlling shareholder and strategic investors in the company's future development. 

New China Life Insurance Co. Ltd (新華人壽) backed by Hony Capital will invest RMB 800 million to subscribe to 65.04 million shares.

Company chairman ZHANG Jindong (張近東) will use his wholly-owned company, Nanjing Rundong Investment (潤東投資), to invest RMB 3.5 billion for the subscription of 285 million shares. Following the private placement, ZHANG’s shareholding in Suning will rise from 27.9% to 30.05%.

Proceeds raised will be used to develop chain stores, to build a logistics platform, to upgrade its information technology platform and to supplement operating cash flow.

Suning Applianceprincipally operates franchised retail stores of electronics appliances in China. As of December 31, 2010, the company had 1,311 retail stores in 231 cities throughout China.

Suning and PE-backed Dangdang.com 1. On May 31, Suning Appliance that the company’s online business might possibly join hands with New York Stock Exchange-listed Dangdang.com Inc (當當網), which is backed by DG Capital Partners, Doll Capital Management and Tiger Fund, to grow its online sales. 2. Revenue from Suning’s online platform Suning.com for the first quarter of this year reached RMB 1.29 billion, 80% of which came from household appliances. The website sells home appliances, mobile phones, digital products, luggage, apparel and other electronic equipment.

Hony Capital’s Recent PIPE Deals 1. Just a couple of days ago, Hony Capital agreed to buy a HK$279 million (US$36 million) stake in IT application developer Chinasoft International (中軟國際). 2. In October last year, Hony Capital deployed an aggregate S$283.8 million (US$218.3 million) for 29.47% of the Singapore-listed Biosensors International Group, Ltd, which is engaged in cardio-technology.