Alibaba buys 50% of Guangzhou Evergrande
Print Edition
IN a speedy deal hatched over a few drinks, China’s biggest e-commerce company Alibaba Group has agreed to buy half of the country’s most successful soccer club Guangzhou Evergrande for 1.2 billion yuan (US$192 million).
For Jack Ma, Alibaba’s billionaire founder and confessed soccer agnostic, it may seem a fanciful move ahead of a US initial public offering that could be the biggest technology company IPO to date, and value Alibaba at US$152 billion.
Guangzhou Evergrande is owned by Hong Kong-listed developer Evergrande Real Estate Group, and the team is coached by World Cup winning manager Italian Marcello Lippi.
The club won the 2013 AFC Champions League, becoming China’s first Asian champion since the country launched the professional league in 1994.
At a news conference yesterday, Ma and Evergrande’s billionaire Chairman Xu Jiayin said the deal was hatched over dinner and drinks, and wrapped up in just a few days.
The idea of Ma investing in the soccer club was only raised on Monday, said Xu. “I got Jack drunk in Hong Kong and afterwards asked him if he’d invest, and he said ‘okay,’” Xu said. “The discussions were finished within 15 minutes yesterday morning.”
The club will issue new shares and invite 20 strategic investors to each take a 2 percent stake in the enlarged shareholding, eventually reducing Alibaba’s and Evergrande Real Estate’s stakes to 30 percent each.
The club will then hold 2.4 billion yuan in cash, said Xu. “When the conditions are right for the club to go public, it will.”
Alibaba and its affiliates have spent more than US$6 billion this year on assets in finance, entertainment and healthcare, in a string of acquisitions beyond Alibaba’s traditional e-commerce businesses.
“We’re not investing in football, we’re investing in entertainment,” Ma said. “Alibaba’s future strategies are health and entertainment.”
“We want to use the Internet and technology to help traditional enterprises transform,” said Ma. “Alibaba doesn’t do real estate, but will support real estate companies like Evergrande.”
Alibaba’s investment could be more about building a national brand and establishing good relationships than doing good business, analysts said.
“Most, if not all, professional sports teams lose money, and anybody who buys into them isn’t doing it as a money making proposition,” said Doug Young, a professor at the Fudan University Journalism School.
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