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Goldman, Alibaba lead $600m round for China's Suning Sports

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Goldman Sachs and Alibaba Group have led a $600 million Series A round of funding for the sports unit of Chinese electronics retailer Suning, which holds the domestic media rights to a range of sporting competitions. The deal values the business at more than RMB10 billion ($1.5 billion)

Yunfeng Capital, Lion Rock Capital, property developer Evergrande Group, and artificial intelligence technology provider SenseTime are among the other investors. They were joined by several provincial and local government sports industry investment funds, as well as the overseas subsidiaries of China Construction Bank (CCB), Industrial & Commercial Bank of China (ICBC), and Agricultural Bank of China (ABC).

Suning Sports owns three football clubs, including Italy’s Inter Milan, but these are said to have been excluded from the deal. According to a statement from Hina Group, a financial advisor on the transaction, the assets concerned cover media, service, retail, and youth training.

Notably, Suning Sports claims to be the first sports media platform in China to gain exclusive rights to Europe’s five major football league championships: England’s Premier League, Spain’s La Liga, Italy’s Serie A, Germany’s Bundesliga, and France’s Ligue 1. It also owns rights to China’s Super League and the Asian Champions League, as well as sports such as UFC and WWE.

Suning has sought to offset the impact of e-commerce players on its core business by establishing a presence in the online-to-offline (O2O) space and by diversifying its operations. The company set up dedicated units for sports, media and entertainment, real estate, and financial services. Yunfeng was one of 15 investors that committed RMB5.34 billion to the financial services business at the end of last year.

Yunfeng was founded by Jack Ma, founder and executive chairman of Alibaba Group, and David Yu, formerly chairman of Focus Media. In 2015, Alibaba bought a 19.99% interest in Suning, while Suning took a 1.1% interest in the e-commerce giant. As part of the deal, Suning agreed to open a flagship store on Tmall, while its distribution business joined Alibaba's Cainiao logistics network.

The Suning Sports transaction also represents an extension of this strategic engagement. Their online video platforms, Suning’s PPTV and Alibaba’s Youku, will cooperate on sports content. Youku held exclusive online broadcasting rights to the recent football World Cup.

“In the mobile internet era, the sports industry is fully embracing digitization, artificial intelligence, and the integration of online and offline resources. Suning Sports is based on Suning Group’s leading smart retail ecosystem and the development of an industry value chain around the rights to top events,” said Hai Zhu, a managing director at Hina.

Suning is not alone in seeking to leverage media and entertainment content, including sports, to engage with consumers more effectively and drive its core business. The likes of Alibaba and Tencent Holdings are pursuing versions of this strategy, while real estate developer Wanda Group has subdivided and diversified its business to reflect new economy interests in a similar way to Suning.

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