Chinese sportswear maker Xtep gets US$129 million boost from Hillhouse Capital to grow K-Swiss, Palladium brands in global markets

Funds managed by Hillhouse Capital to buy two tranches of convertible bonds by Xtep and its subsidiary Xtep Global

Money will be used to push Palladium, K-Swiss footwear brands which it acquired in August 2019, company says in exchange filings

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Ding Shui Po, Chairman and Chief Executive Officer of Xtep International. Photo: Nora Tam

Published: 1:31pm, 15 Jun 2021Updated: 8:41pm, 15 Jun 2021

Xstep International is getting a HK$1 billion (US$129.4 million) investment boost from private equity firm Hillhouse Capital as Chinese sportswear manufacturing group seeks to expand its global market share following an earnings slump last year.

The firm has proposed to issue two tranches of convertible bonds to offshore investment vehicles managed by Hillhouse Capital Management, according to stock exchange filings on Tuesday. The stock surged by a record 21 per cent on the news.

The capital infusion will allow the manufacturers to promote some of the foreign brands it acquired over the past two years to take on market leaders like Nike and Adidas in overseas markets, after sales stagnated last year while earnings crashed for the first time since 2017 amid rising competition with Anta Sports and Li Ning.

Sportswear makers are also facing heightened scrutiny in markets amid spats over the alleged use of forced labour in cotton produced in Xinjiang.