Supply chain management giant Li & Fung has announced it will sell a 4.85% stake in the company to Singapore-based investment firm Temasek for around HKD$3.9bn (US$499m).

Li & Fung plans to use the proceeds to fund new acquisitions. The company's shares leaped 10.8% on the Hong Kong Stock Exchange following yesterday's (7 September) announcement.

William K Fung, group MD of Li & Fung Limited, said: "We are very pleased to have Temasek as one of our strategic shareholders in view of its long-term approach to this investment.

"Temasek is an important investor in Asia with a sterling reputation.

"We have no doubt that this strategic investment by Temasek will be of benefit to Li & Fung's activities in Asia and will further enable us to take advantage of any acquisition opportunities that may arise in this economic environment."

Li & Fung has entered into a subscription agreement with Temasek, which will subscribe to 168,000,000 new shares at a price of HKD$23.09 each.

This is the average closing price for the last five trading days up to and including 5 September 2008, without any discount or premium, a statment said.

In addition, Temasek has agreed not to dispose of the shares for at least 12 months after completion.

The investment represents 4.85% of the existing issued share capital of Li & Fung as of today and 4.62% of the issued share capital of the company as enlarged by the subscription.

Mr David Heng, managing director, investment, Temasek Holdings, said: "We are privileged to have this opportunity to invest in Li & Fung. We have long admired the company as a global leader in the consumer goods sourcing industry.

"With its robust business model and impressive leadership and management, we believe the company has excellent potential."

Hong Kong-based Li & Fung now operates through a sourcing network of over 80 offices in more than 40 economies.

Earlier this year it announced the acquisition of New York handbag brand Van Zeeland Inc for $330m.