China Fund Buys 20% of French Soccer Club, Forms Joint Venture

(Beijing) — Chinese venture fund IDG Capital Partners will form a sports-services joint venture with French soccer club Olympique Lyonnais in an equity tie-up that reflects China’s growing interest in European soccer.

As part of the tie-up, IDG Capital will also pay 100 million euros ($106 million) for 20% of Olympique Lyonnais Groupe, the owner of the Lyon-based club.

The deal extends a buying spree that has seen Chinese investors spend more than $2 billion for stakes in 15 European soccer teams, spurred by the country's ambition to become a soccer powerhouse. Some investors also hope to use the European investments to market their own products in China, where soccer is very popular.

The buying spree has accelerated under the influence of President Xi Jinping, himself a big soccer fan who hopes to improve the quality of the game in China. Despite the sport’s local popularity, China seldom qualifies for the FIFA World Cup, held every four years, and the country is considered a global soccer laggard.

Unlike previous deals that were mostly marketing partnerships, IDG’s new alliance aims to introduce training schools into China and develop more local talent, IDG partner Li Jianguang said. IDG also aims to roll out soccer-club consulting, sponsorship and sports-tourism services through the joint venture.

“Olympic Lyonnais is very picky in selecting partners, valuing resources more than capital,” Li said. “We have previously invested in the sports industry through such companies as broadcast rights distributor Super Sports Media Inc. and football consulting firm Shankai Sports LLC,” he added.

Xi previously said that China will introduce 20,000 soccer schools by 2020, signaling a large potential for business and training cooperation between China and Europe.

Such acquisition will also benefit domestic soccer teams, analysts said. In June, the sports arm of retail giant Suning bought 70% of Italian soccer club Inter Milan, which could bring resources to the company’s own domestic team, Jiangsu Suning.

Li told Caixin that IDG is also in talks to invest in a Chinese team, though he wouldn’t give a name. Market observers have previously said that IDG might invest in the Beijing Guoan Football Club, which could use Olympique Lyonnais’ resources to improve.

Contact reporter Coco Feng (renkefeng@caixin.com)