New Southampton FC Owner Gets China-Backed Bank Funding

Southampton Football Club’s new owner funded his 200 million-pound ($257 million) takeover of the English Premier League team with a loan from a Chinese government-backed bank in Hong Kong, people familiar with the matter said.

A Chinese investor group led by Lander Sports Development Co. Chairman Gao Jisheng settled the bulk of the acquisition cost with a loan from Hong Kong’s Nanyang Commercial Bank Ltd., according to the people. The consortium purchased an 80 percent stake in Southampton in a deal completed this week, one of the people said, asking not to be identified because the information is private. 

The borrowing is backed by some of Gao’s assets outside of China, including those in the former Portuguese colony of Macau, the people said. Nanyang Commercial Bank was bought last year by China Cinda Asset Management Co., a financial group whose biggest shareholder is the Chinese central government.

By obtaining offshore financing in Hong Kong, Gao skirted a Chinese regulatory clampdown on companies buying trophy assets overseas like sports teams, film studios and luxury hotels. The rising government scrutiny has stymied attempts by prominent dealmakers including Dalian Wanda Group Co., which saw its acquisition of a U.S. television producer collapse after it faced difficulties transferring money out of China.

New Partner

Lander Sports, which has a market value of $1.4 billion in Shenzhen, said earlier this year it agreed to buy control of Southampton from team owner Katharina Liebherr. Gao later decided to pursue the transaction in a personal capacity, after the listed company said it terminated its involvement due to changes in domestic policies. Southampton joins West Bromwich Albion, Aston Villa and Birmingham City among teams at least partly owned by Chinese investors.

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Liebherr announced Aug. 14 that the Gao family had become a partner of the team, according to a letter to fans published on the soccer team’s website. The memo from Liebherr, which said the partnership also involves Gao’s daughter Nelly, didn’t include any specific financial terms. 

DealGlobe acted as financial adviser to the Gao family in the transaction. A representative for Gao declined to comment, while a spokeswoman for Nanyang Commercial Bank said she couldn’t immediately comment.

A Chinese deal to buy Italy’s AC Milan struggled through an eight-month delay while businessman Li Yonghong found new backers after its state-owned partner backed out, people familiar with the matter had said.

Soccer Superpower

Lander Sports, founded in 1995 by Gao as a real estate developer, started to shift its focus two years ago following President Xi Jinping’s call to make China a soccer superpower. The company now builds stadiums, runs tournaments and training academies and makes private equity investments in the sports industry, according to its website.

Gao’s private holding company owns stakes in firms including Lander International Financial Leasing Co., a Shanghai-based provider of machinery, aviation and shipping leasing, according to its website. It also has a leasing joint venture in Macau with Tai Fung Bank Ltd., a lender controlled by the family of the territory’s former chief executive, Edmund Ho.

Southampton have turned themselves from a second-tier, financially stretched outfit into a Premiership team. The club had 166.2 million pounds of total assets as of June 2016 and was projected to report a net income of 27.4 million pounds for the financial year ended June this year, according to an April exchange filing from Lander Sports.

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— With assistance by Jing Yang De Morel, Jonathan Browning, Annie Lee, and David Hellier

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