Secoo to Get $175 Million Convertible Note in Partnership With JD & L Catterton Asia
The stock of the luxury retailer rose more than 8 percent Monday after the announcement of its collaboration with China's e-commerce giant, JD, and a private equity firm.
Secoo Holding Ltd. (Nasdaq: SECO) saw its shares rise more than 8 percent today after it announced that it would receive $175 million in funding from China's second-largest e-commerce platform, JD.com Inc. (Nasdaq: JD), and a Pan-Asian private equity firm, L Catterton Asia.
The news of the deal sent the shares of Secoo to $9.73 per American depositary share on Monday, up 76 cents.
The investment, which has yet to close, comes as a three-year note that would accrue interest at the rate of 8 percent, and would be convertible into ordinary shares of Secoo. L Catterton Asia would have an option to acquire 500,000 ADSs, with two ADSs representing one ordinary share.
After closing the deal, L Catterton and JD could appoint a director and an observer to Secoo's board, if they hold a 5-percent stake in the company.
Through this new partnership, Secoo, which operates one of the largest upscale products and services platforms in China, seeks to expand its presence in the luxury market.
"By establishing relationships with leading partners in the consumer, luxury goods and e-commerce spaces, Secoo is poised to gain invaluable name recognition and further boost the Company's reputation in the international luxury consumer space," the chairman and chief executive officer of Secoo, Richard Li, said in a statement today.
In turn, JD is looking to increase its sales in the luxury products department. "Chinese consumers are increasingly discerning about their luxury purchases, demanding more variety and choice than ever," the president of JD Fashion & Lifestyle, Shengli Hu, said.
"As we look to continue to meet this demand, we see many potential areas for future collaboration with Secoo," he added.
Hu, who has served with JD for five years, was recently appointed to lead the e-commerce giant's fashion division. In a June interview to Luxe.CO, Hu said he sees great significance in maintaining the image of luxury brands at JD, which operates a separate warehouse for luxury products.
L Catterton Asia, which has backed companies like Future Lifestyle Fashions Ltd., India's largest integrated fashion company, is bringing Secoo its expertise in global fashion and retail, as well as opportunities to collaborate with its portfolio companies.
Secoo did not specify the date of the investment, but said the deal is expected to close "in the near future."
The stock of Secoo ended the day at $9.73 per share, up more than 8 percent, after it announced a new partnership with JD and L Catterton Asia.