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Li & Fung Gets New Investor

Singapore-based Temasek Holdings Ltd. Invests $500 Million in Li & Fung.

It looks like Li & Fung Ltd. will continue to be hot on the acquisition trail.

Fresh from snapping up handbag company Van Zeeland Inc., Hong Kong-based sourcing giant Li & Fung Ltd. has lined up a new investor as it sets its sights on making more acquisitions. Singapore-based investment firm Temasek Holdings Ltd. has agreed to invest 3.9 billion Hong Kong dollars, or about $500 million, in the Hong Kong company via a specially reserved Li & Fung capital increase. Temasek will buy 168 million new Li & Fung shares at 23 Hong Kong dollars, or $2.95, a share, giving the Singapore company a 4.6 percent stake in Li & Fung. The latter said it will use most of the funding to fund further acquisitions.

Last month, Li & Fung’s U.S. subsidiary bought Van Zeeland for $330 million. In 2006, it bought Rosetti Handbags and Accessories Ltd. for $162 million.

“We have no doubt that this strategic investment by Temasek will be of benefit to Li & Fung’s activities in Asia and will further enable us to take advantage of any acquisition opportunities that may arise in this economic environment,” William K. Fung, group managing director of Li & Fung Ltd., said in a statement.

Last year, Li & Fung purchased Tommy Hilfiger’s global sourcing operations, four Liz Claiborne brands and numerous outsourcing companies, including property brand specialist Regatta, Helly Hansen Outsourcing, Woolworth Germany Outsourcing and American Marketing Enterprises. This year, the firm acquired CPD Asia, which makes cosmetics display units, and Silvereed Group, a fashion company that works with such brands as BCBG Max Azria.

In March, Li & Fung outlined a three-year plan to grow core operating profits to $1 billion and revenues to $20 billion by 2010. Of this, $16 billion will come from its core sourcing business and $4 billion from onshore business in the U.S., Europe and China.

The company said at the time it will continue to buy new businesses, with a focus on two sectors: health, beauty and cosmetics, and footwear.