China’s IDG buys into Olympique Lyonnais

The Beijing-based unit of IDG Ventures is the latest Chinese manager to tap into European football.

Beijing-based private equity and venture capital firm IDG Capital Partners has bought a 20 percent stake in OL Group, the listed holding company of French football club Olympique Lyonnais for €100 million ($111 million), according to a statement.

IDG Capital, which manages over manages over $7.7 billion of assets, is the China-focused unit of San Francisco-based venture capital firm IDG Ventures.

The investment comes amid a push by Chinese president Xi Jinping to boost China’s presence in global football and become a “football superpower by 2050”. China has a goal of having at least 20,000 football training centres and over 70,000 pitches by 2020, according to a strategy unveiled by the Chinese Football Association in April this year.

Chinese firms which have snapped up European teams include Hong Kong-based private equity firm CITIC Capital and Beijing-based China Media Capital (CMC) Holdings, which between them have invested $400 million in City Football Group, the owner of Manchester City Football Club. Property developer Dalian Wanda Group owns a 20 percent stake in Spain’s Atletico Madrid. Earlier this month, a consortium of Chinese investors, including Fuzhou-based investment fund Haixa Capital and the State Development and Investment Corporation bought Italian club A.C. Milan for €740 million ($821 million) from former Italian prime minister Silvio Berlusconi’s investment company Fininvest.

IDG Capital’s investment in Olympic Lyonnais will be used to pare down the French football club’s debt from €265 million to €165 million as well as to finance its expansion plans in Asia, it said in a statement. Along with the investment, IDG and OL have also inked a joint venture to develop the club’s marketing programme and to create football academies in China, Hong Kong, Macau, and Taiwan. Following the investment, IDG will hold two board seats in the OL Group.

IDG did not confirm which fund the investment was made from. It is currently investing its $1 billion venture capital fund IDG Capital Fund III, which it raised alongside Silicon Valley-based venture capital firm Breyer Capital, according to PEI data. The fund targets Chinese start-ups focused on technology, media & telecommunications (TMT), healthcare and consumer products, as well as global companies entering the Chinese market.

In June this year, IDG together with Hong Kong-headquartered firm China Everbright raised $1.5 billion towards a $3 billion target for IDG-Everbright M&A Fund, a buyout fund that will back Chinese companies seeking overseas expansion.

The firm focuses on five industry segments: Internet, mobile and technology, modern services and brands, healthcare, and industrial technology and resources. It is an early investor in some of China’s internet companies including Shenzhen-based Tencent, search engine Baidu, and online portal Sohu.