China’s IDG enters France’s Ligue 1 taking a €100m piece of Lyonnias

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August 15 – The long march of Chinese money into Europe’s big leagues took a significant step into France’s Ligue 1 this weekend with Olympique Lyonnais owner OL Groupe announcing that Chinese investment fund IDG Capital Partners has agreed to take a 20% stake in the club.

OL Groupe is a listed company and the IDG acquisition will see the Chinese pay €100 million for a 20% stake in the club.

The Chinese group will buy new OL Group shares and subordinated convertible bonds. Shares will be bought at €3.34 per share, 18.5% above their last closing price. The bonds will be bought at a 60.71% premium above their last traded price.

The bulk of the new money will be used to reduce the firm’s debt, which will lower its financing costs and allow it to refinance remaining debt. OL Group also said that IDG must hold on to its shares for at least two years.

In return IDG will promote the club brand in China, Hong Kong, Macao and Taiwan and will get two to three seats on OL Group’s board.

The IDG investment could turn out to be a smart investment at the right time, Lyonnias is poised to amount a challenge to the dominance of Qatari-owned Paris St Germain in France. The club has a new 59,000-seat stadium that hosted six matches, including a semi-final, during this summer’s Euro 2016 championships.

The potential new revenue possibilities from the stadium and a playing squad that is developing make a significant Ligue 1 challenge a real possibility, The club opened their season on Saturday with a 3-0 win over Nancy. PSG only managed a draw.

Chinese money has been eyeing up French football opportunities but Lyonnais is the first major investment in Ligue 1.

China’s ORG Packaging bought a controlling 60% stake in Ligue 2 side AJ Auxerre for €7 million earlier this month. In 2015 trading company Ledus took control of FC Sochaux, also playing in France’s Ligue 2.

Over the past six weeks Chinese investors have taken control at AC Milan and Inter Milan in Italy’s Serie A as well as West Bromwich Albion in the English Premier League. Chinese groups are also believed to be in the final stages of negotiating the acquisition of Hull City.

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