Page 32 - February 2022

MARK FAITHFULL

Following the

Money

Mark Faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets.

Hong Kong retailers braced for more Private equity circles Boots acquisition
bad news Two of the world’s biggest buyout firms, Bain Capital and CVC
Retailers in Hong Kong fear that Beijing will once again clampdown Capital Partners, are understood to be lining up a multi-billion-dollar
on travel restrictions as it continues to implement its zero-Covid takeover of Boots, the UK’s largest drugstore chain.
strategy amid preparations for the Beijing Winter Olympics, which Currently part of the Walgreens Boots Alliance (WBA), an auction
have heightened vigilance. of Boots appears increasingly likely this spring, representing one of
Three years of democracy protests followed by the impact of the the biggest UK retail deals for many years. The American owner of
pandemic have devastated Hong Kong’s retailers, previously reliant on Boots received a takeover approach from Bain Capital more than
the droves of mainland Chinese tourists who used to visit and spend. two months ago that prompted the possible sale of the UK high
With suggestions that a proposed modest quota of cross-border street chain.
shoppers would be allowed back to Hong Kong, the latest news It is understood that Bain is positioning itself as a frontrunner in
is another hammer blow. Hong Kong’s popular shopping districts a forthcoming auction for Boots after completing months of due
previously boasted store rents more expensive than those on New diligence on the health and beauty retailer, which operates from
York’s Fifth Avenue and now the question is, can Hong Kong ever more than 2,000 stores and employs over 50,000 people.
fully recover? A number of other private equity firms have been alerted to
In January 2019, just before the protests began, arrivals from the the possible sell-off of the chain as part of a process operated by
Chinese mainland reached an all-time high of 5.5 million, yet two Goldman Sachs. There is likely to be increased interest after WBA
years later the number of leisure visitors remained close to zero in announced strong trading figures at Boots recently.
2021, according to the Hong Kong Tourism Board. While Bain and CVC are understood to be working on a plan
Savills’ Regional Head of Research and Consultancy for Asia-Pacific, to acquire Boots, predicated on substantial investment in its digital,
Simon Smith said: “Shop rents in prime locations have undergone a beauty and healthcare services offerings, it also remains possible that
‘substantial correction’ and regressed to 2003 levels, down more than the business remains part of WBA, while spinning the chain off into a
75 per cent from peak levels in 2013.” separately listed company is another option.
With several large projects in the pipeline, the amount of new
store space could reach four million square feet in 2023, according to
Savills, as developers try to time the opening of their malls to coincide
with the return of tourists.

H&M, CEEK and metaverse
In January H&M had to deny that it was collaborating with CEEK after
reports emerged from India claiming that H&M had announced that it
would offer its customers a three-dimensional shopping experience in its
virtual store in the metaverse via CEEK city.
The reports said that customers would be able to walk through
the store, choose the product they want and purchase it in the CEEK
City universe, for clothes, which could only be worn in the digital
environment. Payment would be made through CEEK coin. Customers
would also have the opportunity to order the same apparel from H&M’s
physical stores later.

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32 RETAIL & LEISURE INTERNATIONAL FEBRUARY 2022