Singapore’s Temasek Takes Stake in LF Logistics

Temasek Holdings has invested US$300 million (S$406.1 million) for a a 21.7 per cent stake in Hong Kong-based global supply chain giant Li & Fung’s logistics business.

The injection from Singapore’s state investment company wil value the business, LF Logistics, at approximately US$1.4 billion.

Li & Fung said that as a result of Temasek’s investment, it will postpone a previous proposed spin-off initial public offering for LF Logistics. It will remain a controlling shareholder of LF Logistics with a 78.3 per cent stake.

Proceeds from the investment will be used to fund LF Logistics’ future capital expenditures, business growth initiatives and to repay its existing bank loans.

LF Logistics has achieved multiple-year double-digit organic growth, and is rapidly growing in Asean and expanding into new geographies including Japan, Korea and India, said Li & Fung.

Temasek’s investment comes after an overall slower pace of global investments in the past year for the firm.

“The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung’s capital structure and financial flexibility,” said Spencer Fung, Group CEO, Li & Fung.

“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.”

Shares of Li & Fung, which suspended trade on Friday morning, jumped as much as 18.8 per cent to HK$1.45, the highest since April 23, on Friday afternoon in Hong Kong trading.