Chinese club giant Guangzhou Evergrande files for IPO
Guangzhou Evergrande, China's most successful club of recent years, has filed with the National Equities Exchange and Quotations (NEEQ) to list on the so-called 'New Third Board' - a trading platform for shares in small- and medium-sized companies - according to a Thursday filing with the Hong Kong Stock Exchange.
The club (full name: Guangzhou Evergrande Taobao Football Club Co Ltd) is currently owned 60% by property firm Evergrande Real Estate Group Ltd and 40% by e-commerce giant Alibaba Group Holding Ltd and has been valued by Chinese media at 10 billion yuan ($1.61 billion), although on what basis is unclear as Alibaba last year reportedly paid $192 million for 50% of the club.
The team made a loss of 265 million yuan during January-May but the owners hope that the listing will "enhance the liquidity of its equity interest, thus facilitating the introduction of strategic investors, promotion of corporate image and realization of sustainable development."
Whilst Evergrande is being hailed by various media as "the first Asian football club to list on the stock market" this is not true in a geographical sense - with Trabonspor and Fenerbahce both listed and physically in Asia.
With President Xi aiming to transform China's position in football on the international stage, the stock listing appears to be part of the process of increasing investment in the football sector, although whether this will prove financially sustainable in the longer term is dependent on improving the current low levels of match-day revenues and TV broadcast income.
Whilst looking to benefit from the Chinese state's new focus on the football sector, there is no doubting Guangzhou Evergrande's capitalist credentials, with the stock exchange filing setting out the club's main business and profit model as to invest in football, enhance brand value of the club, and establish a sustainable business platform in order to increase revenues from ticket sales, mercandising, and advertising revenues.