China’s Everbright poised to up Liverpool bid to £1 billion

By Paul Nicholson

September 2 – While Liverpool owners Fenway Sports Group (FSG) remain tight-lipped about the possible sale of the club, the Chinese consortium that has made an offer for the club of £800 million is rumoured to be prepared to raise that amount to £1 billion, despite the club’s poor performance last season.

China Everbright Group, confirmed as bidders last week after a report from China that they had not made a bid (the denial of knowledge of the bid came from a subsidiary division in Hong Kong), are working through PCP Capital Partners, the financial corporate consultancy of Amanda Staveley.

The increase in valuation takes into account an improved future playing performance, increased stadium size and improved broadcast deals, and the on-going incremental growth in international business the club will generate as a result.

According to Bloomberg, FSG corporate advisors Allen & Co have been talking up the value of the club, comparing it to the values and status of its Manchester rivals, United and City.

The original valuation was based on revenues and performance up to the date of the valuation, not taking into account future playing performance or the business and trading improvements that will start to work their way into the clubs accounts this season.

China Everbright Limited is listed on the Hong Kong stock exchange and is described as a financial services company in asset management, direct investment, brokerage and investment banking, It’s parent company is state-owned China Everbright group. According to the Sunday Times, who first broke the story at the weekend, the cash for the deal is likely to come the China Investment Corporation (CIC), China’s main sovereign wealth fund. CIC has access to investment funds of more than $600 billion.

Raising the bid for the club to £1 billion is unlikely to unduly trouble the Chinese. It also takes their offer closer to the Forbes valuation of £1.16bn.

Liverpool reported a profit of £60 million in its last financial year, most of that from the sale of Luis Suarez to Barcelona. The previous year Liverpool’s profit was £1 million.

FSG bought the club for £300 million in 2010 and while chairman Tom Werner told local newspaper the Liverpool Echo that the club was not for sale two weeks ago, he did say that the owners would be prepared to take a strategic investment.

The Chinese are likely to only be interested in a bigger money game rather than opting for a small stake in the club. A £1 billion offer would be hard for even the most hard-nosed negotiator to ignore, marking what would be a £700 million profit on the original acquisition.

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