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China to rein in 'irrational' outward investments after investing 15B yuan in soccer clubs

By Shan Xin (People's Daily Online)    15:45, July 20, 2017

China has started to rein in outward investments as Chinese consortiums have transferred 15 billion yuan abroad in three years to invest in soccer clubs.

The new restrictions require special authorization on overseas investments of amounts over $50,000,000.

Spokesman for the National Development and Reform Commission said at a press conference on July 18 that relevant departments would still focus on irrational outward investments in real estate and entertainment, especially soccer clubs.

According to the official data, more than 15 billion yuan was spent on 15 soccer clubs by Chinese-led consortiums. The largest amount was by Sino-Europe Sports Investment Management Changxing, who took a 99.93-percent stake in AC Milan in April for €520 million.

Market players questioned the large investments in overseas soccer clubs, as most of them were in the red.

(The press conference for Suning Acqisition of Inter Milan)

Suning spent €270 million for a 70-percent stake in Inter Milan, which lost €275.9 million in five years.

Yin Zhongli, a researcher at the Institute of Financial and Banking of Chinese Academy of Social Sciences, criticized the companies for transferring assets through offshore accounts because of their high debt ratio in China. “This will increase their inward financial risk once any problems appear in their outward investment,” Yin said.

Sun Weimin, the vice president of Suning, said investing in Inter Milan is for expanding international influence, as well as for introducing advanced training techniques to improve Chinese soccer.

The restrictions are expected to make offshore fund arrangements more difficult, which used to come from offshore financing against domestic guarantee, setting up quanto swaps or buy-out funds, as well as equity transfers.  

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Shan Xin, Bianji)

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