Chinese tech giant Tencent Holdings Ltd., e-commerce company JD.com Inc. and online apparel retailer Vipshop Holdings Ltd. are in a group planning to invest 10 billion Chinese yuan in Chinese menswear maker Heilan Home Co. Ltd., Reuters reported, citing sources with knowledge of the matter.
Tencent is leading the group, which aims to pay 5 billion yuan for a stake in Heilan of less of than 10%, one source said, adding that the other 5 billion yuan would be used to establish an industrial investment fund for deals compatible with Heilan's business.
The proposed deal between the Chinese companies could be announced as soon as Feb. 2, according to the report.
Jiangsu-based Heilan Home, which has more than 5,000 stores mostly located in China, halted trading of its shares Jan. 29.
Tencent and JD declined to comment on the matter to Reuters, while Vipshop and Heilan could not be reached for comment.
An investment in Heilan could add to a growing list of investments made by JD and its biggest shareholder Tencent to challenge Chinese tech and e-commerce rival Alibaba Group Holding Ltd. in both online and offline retail.
JD and Tencent were among a group of investors planning to take a 14% stake in Dalian Wanda Commercial Properties Co. Ltd. in January, in a deal that will see collaboration with the real estate player to build an omnichannel consumer model.
Tencent in December 2017 also unveiled a plan to buy a 5% stake in JD-backed Yonghui Superstores Co. Ltd., weeks after Alibaba proposed purchasing a 36.16% stake in Chinese hypermarket operator Sun Art Retail Group Ltd.
Meanwhile, Tencent and Yonghui are looking at a possible investment in the Chinese business of French hypermarket chain Carrefour SA.
In addition, JD and Tencent in December 2017 jointly made a US$863 million investment in Vipshop in a bid to further extend JD's reach to Chinese female shoppers and boost its scale in the apparel business to compete with Alibaba.
As of Jan. 31, US$1 was equivalent to 6.29 Chinese yuan.
