Things get complicated in the negotiation between BC Partners and the Chinese group Suning, the main shareholder of Milan’s based iconic soccer team FC Inter. The offer of the fund, which is said to value the team less than the 900-950 million euros requested by Suning, was in fact judged too low, so the games have now reopened, with the possibility for other investors to come back in the game. The Zhang family, at the head of the Suning group, reported yesterday in conference call to the two CEOs of the club, Alessandro Antonello and Beppe Marotta, of the decision to decline the advances of BC Partners. However, the private equity firm has not yet submitted a formal offer and is still willing to do so by the end of the week.
We recall that BC Partners has hired the team of the British sports crowdfunding platform Tifosy as advisor in the negotiations with Suning, namely Gianluca Vialli (legend of Juventus, Sampdoria and Chelsea soccer teams) and Fausto Zanetton (specialist in the media, tech and sport sectors in Goldman Sachs and Morgan Stanley), together with Marco Re, former financial director of Juve and today head of the Italian branch of Tifosy (see here a previous article by BeBeez).
As it is known, Inter is looking for fresh capital to support the working capital and in perspective to refinance the 375 million euro bond maturing at the end of 2022 and for this reason Suning has given Goldman Sachs a mandate to probe the market (see here a previous article by BeBeez). BC Partners had enteres in exclusive talks with Suning which have now expired, while the Swedish fund EQT, the American Arctos Sports Partners and Ares Management Corporation and the Singapore sovereign fund, Temasek Holdings, are on the waiting list. And in the last few hours there are also rumors about a strong interest by Fortress. The latter, however, is an investor specialized in debt and therefore could be the best candidate to support in the deal a private equity or a sovereign fund such as Mubadala, which is one of the sovereign funds of Abu Dhabi, which currently has 232 billion dollars of assets under management and in Italy owns a stake in Unicredit and controls Piaggio Aeropsace.
Fortress Investment Group, an American company controlled by Softbank, has often appeared on the occasion of large debt transactions in Italy, including ones regarding distressed assets. For example, on the latter front, in January 2020 he made an offer for the Maccaferri Group (see here a previous article by BeBeez) and already from the end of 2019 and the beginning of 2020 he is one of the funds that is studying the Montepaschi dossier (see here a previous article by BeBeez). Also Fortress had provided 75 million euros of bridge finance to Astaldi, subscribing with King Street a supersenior bond maturing in February 2022 which was listed on the Third Market of the Vienna Stock Exchange (see here a previous article by BeBeez). That bond was then sold entirely to Salini Impregilo in October 2019, while at the end of November it was approved to increase it up to a maximum of 190 million. Also Fortress had been one of the names that emerged as potential investors in a debt operation on Lega Calcio Serie A as an alternative to the deal studied in terms of equity by the CVC-Advent-FSI consortium (see here a previous article by BeBeez). In Italy, Fortress also owns 100% of the real estate fund management company Torre sgr. In fact, last July 2020, Fortezza RE, controlled by Fortress and already owner of 62.5% of the capital of Torre sgr, rose to 100% after taking over its 37.5% stake from Unicredit (see here a previous article by BeBeez).
Returning to Inter, we recall that last August 2020 Inter Media and Communication spa, the sole director and manager of the media, broadcasting and sponsorship sectors of FC Inter, placed bonds for 75 million euros which were listed on the Luxembourg Stock (see here a previous article by BeBeez) and which have characteristics identical to those of the bond placed for 300 million in December 2017 (see here a previous article by BeBeez).
All this, in fact, while Inter’s accounts are suffering. Already at the end of October, the Board of Directors, chaired by Steven Zhang, had approved the financial statements as at 30 June 2020, with a loss that had been “only” about 100 million thanks to the capital gain collected for the sale of champion player Mauro Emanuel Icardi (see here a previous article by BeBeez). And in fact then the shareholders meeting at the end of November had filed 2019/2020 financial statements which showed a decrease in revenues of about 45 million euros, with the consolidated figure that stood at 372.4 million, with an ebitda of 14, 5 millions and an operating loss of 102.4 millions (see the press release here).
Lion Rock Capital, based in Hong Kong, had acquired its 31.05% of FC Inter from Indonesian Erick Thoir in January 2019 for 150 million euros, through International Sports Capital spa (see here a previous article by BeBeez). Founded in 2011 by Daniel Kar Keung Tseung, a Sino-American businessman, trained in the US at Princeton and Harvard, the fund invests mainly in the sports, e-commerce, food and medical sectors and in its portfolio it also has a significant stake in Suning Sports, in turn controlled by the Chinese electronic retail giant Suning group of the Zhang family, which had bought 68.55% of Inter Milan in 2016 for 270 million euros (the remaining 0.4% of the capital belongs to other minor shareholders).