The potential sale of one of the world’s most famous football clubs is offering a glimmer of hope to Nanjing’s heavily indebted Suning. With a billion dollars on the table, the saviour of our city’s celebrated, former success story might lie in the Saudi Arabian royal family.
In June of 2016, Nanjing-based Suning acquired a 68.55 percent share in Italy’s Football Club Internazionale Milano, Inter Milan to many, for the sum of €270 million.
Today though, talks are underway in Nanjing for that share to be sold to Saudi Arabia’s Public Investment Fund (PIF), for the sum of US$1 billion, reports Tribal Football.
That’s not a bad return. And on some levels, the sale makes sense. With total assets of over half a trillion US dollars, the PIF, as one of the largest sovereign wealth funds globally, is also part owner of UK football team, Newcastle United.
But while China and Saudi Arabia have good economic relations, it’s still far from a done deal. The Chinese government will undoubtedly have something to say about it, but may also look the other way in the interests of getting Suning back on its feet without requiring further public funds.
While it’s naturally a lot of money, it’s still quite a stop short of Suning’s total debt. That amount, according to S&P Global Ratings, stood at US$6.6 billion at the end of the third quarter of 2020, reported The Financial Times.
But it is exactly what Suning needs to square its books, for now. The company had been obliged to repay ¥15.8 billion worth of bonds by the end of last year, but had also managed to secure ¥8.8 billion by selling a 17 percent stake to Alibaba, Xiaomi and a local government fund last summer, reported Asia Financial.
So Suning is about a billion dollars short of meeting its obligations. Is it a coincidence that’s the asking price for the Saudi Royals? Probably not.
Suning was, for a time, China’s largest privately owned enterprise, and its founder, Zhang Jindong, the country’s richest man.
But the Inter Milan acquisition was just one of many that has led to the last year of financial woe for Suning. Later in 2016, Suning acquired League of Legends e-sports team, T.Bear Gaming, and followed it with a 80 percent share in the Chinese division of Carrefour in 2019. And that same year also saw the giant purchase 37 of the Wanda Group’s shopping malls.
Then came COVID. And the timing could not have been worse. While the company benefited from expanding its home delivery capabilities, it was forced to adopt a franchise business model for its network of Suning Convenience Stories (苏宁小店) in July of 2020.
