Li Ning Co:TPG reported to be offering for sale 114mn shares of Li Ning (current 5.7%stake)

According to Bloomberg (January 17, 2017), TPG (not listed) is offering to sell 114mnLi Ning shares at HK$4.73-HK$4.80 per share (for a total transaction amount of up toHK$539mn-547mn). The shares for disposal represent 5.7% of Li Ning’s currentoutstanding shares. The price range would represent a 3.0%-4.4% discount to theJan 17 close of HK$4.95. According to the news report, TPG would be subject to a60-day lockup period on its residual shares. This would end at around the time of LiNing’s 2016 annual result announcement in the second half of March.

We don’t think this news comes as a surprise since TPG converted its convertibleshares into common shares in Dec-16. In addition to the 114mn shares, TPG stillowns Li Ning convertible bonds with total value of RMB561mn; based on the currentconversion price of HK$4.092 per share, TPG can convert the CBs into 168.6mncommon shares, representing 7.8% of total shares outstanding post conversion. TheCBs are due on Feb 7, 2017 and the conversion period is up to the maturity day.