NASDAQ-listed company LJ International Inc., incorporated under the law of the British Virgin Islands and conducting its business mainly in China, entered into a definitive agreement for a private placement of shares of its indirect wholly-owned subsidiary Enzo Jewelry, Inc., with a consortium of investors led by the private equity firms FountainVest Partners and Spring Capital Asia.
FountainVest Partners is one of the largest private equity funds dedicated to investing in China and focused on companies that are leading in the industry. Spring Capital Asia is an independent private equity firm that invests exclusively in China, and is one of the leading growth investors in Chinese companies operating in the lower mid-market.
The investors have agreed to make an initial investment of US$41.38 million, including an investment of US$31.40 million in newly issued ENZO shares and an acquisition of existing shares of ENZO from LJI in the amount of US$9.98 million.
As a result of the transaction, the investors will hold approximately 28.27% of ENZO’s total issued share capital in the form of a newly created class of redeemable convertible preferred shares. LJ International intends to apply the net proceeds from the investment towards capital expenditures for new store openings, marketing expenses and general working capital. The closing of the investment transaction is expected to be completed during the current quarter of the year.