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It’s official. Farfetch will invest $ 600 million (€ 515 million) by Chinese e-commerce giant Alibaba and Swiss Richemont, owner of jeweler Cartier and watchmaker Montblanc.
In a statement, the Portuguese-led company José Neves (pictured) says each of the companies will invest $ 300 million, through the purchase of convertible bonds from the online luxury fashion retailer.
Farfetch shares continue to jump 10.88% in the “after hours” of the New York Stock Exchange, at $ 41.90, excited by this news, after closing at the regular session time on Thursday to add 7.76% .
On Monday, November 2, The Information already hinted at this possibility, saying the parties were in talks. In that session, the stock rose by 18%.
Farfetch, headquartered in London and traded on the New York Stock Exchange since September 2018, is now capitalizing on this confirmation, at a time when China is emerging as the premier playing field for luxury product brands.
Better access to the Chinese market
Farfetch, Alibaba and Richemont have announced that this global strategic partnership aims to provide luxury brands with better access to the Chinese market, as well as accelerate the digitization of the global luxury sector.
“By leveraging the knowledge of each of the companies and their broad reach, this partnership will bring luxury retailing to the next generation by integrating the physical and digital realms,” the statement said.
“Farfetch will launch purchasing channels for the luxury segment on the platforms of Alibaba, Tmall Luxury Pavilion and Luxury Soho, China’s top luxury destination in the Tmall market, as well as on Alibaba’s cross-border market, Tmall Global,” he adds.
These new channels, underlines the company led by José Neves, extend the coverage of Farfetch’s global platform in the luxury segment to Alibaba’s 757 million consumers.
600 million … plus 500
As part of this global partnership, in addition to the $ 300 million that Alibaba and Richemont will invest in Farfetch, through the purchase of convertible bonds issued by Farfetch Limited, both the Chinese and Swiss companies will also invest $ 250 million (500 million in total) to Farfetch China, with a total interest of 25% in a new joint venture that will include Farfetch’s market operations in China.
Additionally, Alibaba and Richemont have the opportunity to jointly purchase an additional 24% from Farfetch China after the third year of the joint venture’s creation.
The Chinese and Swiss will also explore further opportunities to work more closely with Farfetch in providing services to luxury brands, the statement said.
Alibaba and Richemont’s investments in Farfetch China, as well as the creation of the joint venture, are expected to be finalized during the first half of 2021.
Artemis strengthens
On the other hand, Artemis – the family holding company that controls the luxury group Kering, owner of Gucci, Balenciaga and Saint Laurent – has also agreed to strengthen its current investment in Farfetch, with the purchase of $ 50 million of shares. of its class IL.
(news updated at 23:18)
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