February 5, 2018 / 3:50 AM / 20 days ago

Shares in China menswear firm HLA surge on Tencent tie-up

SHANGHAI (Reuters) - Shares in Chinese menswear group Heilan Home Co Ltd, also known as HLA, jumped on Monday the maximum 10 percent allowed by the Shanghai exchange after it confirmed an investment from an affiliate of Tencent Holdings Ltd.

The clothing firm said late on Friday that Shenzhen Tencent Puhe would take a 5.31 percent stake in the company for 2.5 billion yuan ($396.91 million), reflecting a broader push by tech giant Tencent into retail.

Reuters reported last week that Tencent was leading a deal to invest 10 billion yuan in Heilan and would investment a further amount to help set up an industrial investment fund to focus on deals that fit with Heilan’s business.

HLA’s shares on Monday hit their highest level since July 2016 after being suspended in late January when it said strategic investors were planning to take a 5 percent stake in the company and set up an investment fund.

The firm said in a separate filing to the Shanghai stock exchange on Friday it would set up a 10 billion yuan fund with another Tencent subsidiary, Linzhi Tencent Technology and Ningbo Investment Management.

The move by Tencent, which has made recent investments into retailers including Vipshop Holdings Ltd and Yonghui Superstores, intensifies its rivalry in retail with internet giant Alibaba Group Holding Ltd.

Jiangsu-based Heilan was set up by Zhou Jianping, one of the richest people in China’s fashion industry, in 1997. It runs more than 5,000 stores, mostly in China, and recorded 12.5 billion yuan in operating income in the first three quarters last year, its website showed.

Reporting by Adam JourdanEditing by Miral Fahmy

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