Naibu first Chinese sportswear brand to eye London listing

HONG KONG - China's Naibu is set to be the first homegrown sportswear brand to list in London when it raises up to 50 million pounds ($79.28 million) in an IPO planned for April, sources close to the company said.

Naibu Global International Co Ltd's IPO on the Alternative Investment Market (AIM) would fund its domestic expansion and also help raise its international profile, the sources said on Monday.

"While they are not looking to establish themselves internationally yet in terms of their brands, they do want to build the international profile with a longer-term perspective in mind," said one of the sources. The sources requested anonymity as they are not authorised to talk to the media.

Naibu, whose orange-coloured product logo appears similar to the Nike swoosh, plans to use the proceeds to build factories in central and western China as it seeks to expand its sales of Naibu-branded sports shoes, clothing and accessories in lower-tier cities, a company spokesman said.

Founded by Chinese businessman Huoyan Lin in southeastern province of Fujian in 2002, the company has become China's 10th largest sportswear brand, it said on its web site (www.naibu.com).

'Nai' in Chinese means tenacity, persistence and endurance, while 'Bu' means pace and method, according to the web site.

The company employs about 2,000 staff at its factories and has nearly 3,000 Naibu stores across 21 provinces in China.

Naibu's management is currently doing a roadshow in London, the spokesman said, but declined to comment on the listing details.

British newspaper Sunday Times first reported on the IPO. It said that the Chinese maker of leisure wear and trainers hopes to raise 50 million pounds when it floats on AIM, London's junior market, in the coming months.

TOUGH SPORTSWEAR MARKET

The Chinese sportswear market is fast-growing but highly competitive.

After years of breakneck expansion, local brands such as Li Ning and China Dongxiang (Group) Co Ltd are grappling with shrinking margins, slowing sales growth and mounting inventories of outdated products.

While the Chinese brands struggle, Nike Inc and Adidas, armed with heavy investments in research and development, plus marketing expertise, are gaining market share in the world's second-largest economy.

Naibu operates eight shoe production lines in its two facilities in Fujian with a total annual production capacity of about 6.15 million pairs of shoes, it said.

Naibu expects its sales to increase to about 1.4 billion yuan in 2011 from about 600 million yuan in 2008, one of the sources told Reuters. Sales are expected to rise to 3.4 billion yuan in 2015, the source added.

No profit figures were disclosed by the sources.

In the sportswear industry's battle for China's booming consumer market, the situation is bad and getting worse for the homegrown retailers.

China's fashion apparel market, dominated by sportswear brands and local casual clothing brands, is expected to triple in size to more than 1.3 trillion yuan ($201.3 billion) in the next 10 years, Boston Consulting Group said in a report.

Raising the stakes further, foreign companies are accelerating their expansion into the country's smaller cities, the traditional stronghold of local brands, with products specifically tailored to target consumers in those cities.

Naibu said on its web site its products mainly target students 12 years old and above and it plans to open stores in another four provinces in China.

In 2011, shoes accounted for 56 percent of its sales, with clothing at 41 percent and Naibu-branded accessories making up the rest, Naibu said. ($1 = 0.6307 British pounds) (Editing by Charlie Zhu and Muralikumar Anantharaman)