India’s richest man buys Hamleys toy stores

Mukesh Ambani, chairman and managing director, Reliance Industries. (Supplied)
Updated 10 May 2019

India’s richest man buys Hamleys toy stores

  • Through its Reliance Brands subsidiary, the conglomerate said it signed an agreement to buy, Hamleys, the 250-year-old chain from Hong Kong-listed C Banner International Holdings
  • The acquisition by Reliance Industries, owned by India’s richest man Mukesh Ambani, marks the conglomerate’s first foray in an overseas retail brand

MUMBAI: Hamleys, the world’s oldest toy retailer, is set to pass from Chinese to Indian control after Reliance Industries said it had agreed to buy the British high street icon.
Through its Reliance Brands subsidiary, the conglomerate said it signed an agreement to buy the 250-year-old chain from Hong Kong-listed C Banner International Holdings.
On Friday, C Banner stock was suspended from trading pending an announcement.
Reliance did not disclose the price of the deal, but in 2018, C Banner wrote off $49.8 million in goodwill and brand value related to Hamleys, its annual report showed. The cut reduced the carrying value of the toy retailer by 36 percent to 626 million yuan ($91.85 million).
The Chinese group bought Hamleys in 2015 for $130.2 million from France’s Groupe Ludendo, but its enthusiasm for British acquisitions has since cooled. Last year, it dropped plans to buy 51 percent of House of Fraser, sending the UK department store chain into administration.
The acquisition by Reliance Industries, owned by India’s richest man Mukesh Ambani, marks the conglomerate’s first foray in an overseas retail brand.
Reliance Industries runs the world’s biggest single-location crude oil refinery and has been transforming itself into a consumer-facing behemoth through ventures in retail and telecommunications.
“The worldwide acquisition of the iconic Hamleys brand and business places Reliance into the frontline of global retail,” said Reliance Brands Chief Executive Darshan Mehta.
Founded in 1760, Hamleys resonates with adults and children alike, with its flagship Regent Street store in central London recognized around the world.
The toy seller runs 167 stores across 18 countries, the majority of which are in India, Reliance said. The Indian company, which already holds the master franchise for the brand in India, currently operates 88 stores in 29 cities.
Having established itself as India’s leading mobile telecoms player, Reliance Industries has been firming up plans for a retail onslaught to combine its traditional outlets with an online foray aimed at taking on Amazon.com Inc. and Walmart Inc. in India.
A supermarket operator, Reliance is already the country’s biggest bricks-and-mortar retailer in terms of revenue and number of stores.
The conglomerate’s strategy to diversify beyond refining and petrochemicals has seen its fast-growing telecoms and retail operations driving quarterly profit to record highs at a time when its gross refining margins have taken a hit from oil price volatility and slowing global demand.
The group’s retail business doubled revenue to 356 billion rupees ($5.1 billion) in the three months to Dec. 31 while earnings before interest and tax more than tripled to 15 billion rupees.


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.