The Shanghai Stock Exchange-listed subsidiary of Sanpower, Nanjing Cenbest, has acquired an 89% stake in the 165-year old British department store in a £480m deal which is expected to close in four months.
Simpson Thacher is acting for Nanjing Cenbest – a chain of luxury Chinese department stores which is also being advised by Bank of America Merrill Lynch – led by London M&A partner Derek Baird and Hong Kong corporate partner Shaolin Luo. Baird joined Simpson Thacher in 2012 from Allen & Overy, having formerly been a partner at legacy Lovells until 2006. The hire was a significant boost to Simpson Thacher’s English law capability, following on from the 2009 hire of Clifford Chance corporate rainmaker Adam Signy.
Advising House of Fraser is a Linklaters team led by partner Simon Branigan alongside managing associate Kanyaka Ramamurthi. Linklaters has previously acted for the retailer on deals including a 2011 £250m bond issue, which was part of an effort by the company to refinance debt taken on when it was taken private in 2006, led by London-based high yield partner Mark Hageman.
On this latest deal Lloyds Banking Group, which is among the stakeholders selling its share in the department store, is being advised on debt and equity interests by a King & Wood Mallesons SJ Berwin team led by corporate finance partner Andrew Wingfield.
Clyde & Co, meanwhile, advised Sanpower Group on what is China’s largest foreign retail investment to date with a team of 20 lawyers across Clyde & Co’s offices in Beijing, Hong Kong, London, Guildford, Dubai and Paris worked on the deal, led by partner and chief representative of the firm’s Beijing office, Lynia Lau.
Lau said: ‘As Chinese retail sales are expected to grow at an annual average of 14% and British retail sales continue to recover, this deal opens new opportunities for market expansion for either party.’
Sanpower is a Nanjing-based conglomerate run by chairman Yuan Yafei, who founded the business in 1993, which owns or controls more than 100 companies across multiple industries including finance, retail, media and healthcare with a workforce of about 60,000 employees.
Yafei said: ‘This acquisition is a landmark transaction for a Chinese listed company. House of Fraser is a strong and iconic heritage brand in the UK and abroad, with exceptional fashion credentials. The management team has done an incredible job moving this business from a traditional department store to a recognised premium branded fashion retailer with a first-class multichannel offering. We have always been looking to invest in strong brands like House of Fraser, and take them to the next level of growth.
‘To date, this is the largest cross-border direct acquisition by a Chinese non-state-owned A-share listed company, and the largest overseas acquisition in the retail sector by a Chinese business.’