ALIBABA, RICHEMONT INVEST $1.1 BILLION IN FARFETCH
On Friday, Alibaba Group Holding and Swiss group Richemont said they will collectively invest $1.1 billion in online luxury fashion retailer Farfetch as it prepares to launch a new marketplace in China, as online demand for luxury goods booms in the Asian country.
In addition, Alibaba and Richemont have an option to purchase a further combined 24 percent of Farfetch China after the third year of the joint venture’s formation. Alibaba and Richemont will also explore additional opportunities to work closely with Farfetch to provide services to luxury brands. The investments by Alibaba and Richemont in Farfetch China and the establishment of the joint venture are expected to be completed during the first half of the 2021 calendar year, subject to the satisfaction of closing conditions.
Separately, Artemis has also agreed to increase its existing investment in Farfetch with a $50 million purchase of Farfetch’s Class A ordinary shares.
Farfetch and Alibaba have also formed a steering group to further enhance the Luxury New Retail (LNR) initiative, which is aimed at leading the digitization of the global luxury retail industry. Richemont chairman Johann Rupert, and Artemis chairman François-Henri Pinault, will join Farfetch and Alibaba on the LNR steering group as founding members, bringing their combined decades of industry leadership and expertise.
“This announcement is a major step in our mission to connect the curators, creators, and consumers of the luxury fashion industry,” said José Neves, founder, chairman, and CEO of Farfetch. “The $1.15 billion investment in Farfetch from Alibaba Group, Richemont, and Artemis is a strong validation of our position as the global platform for luxury.”
“The new initiatives with Alibaba Group and Richemont extend Farfetch’s strategy to power the digital transformation occurring across the luxury industry, which has been accelerated by the unprecedented challenges resulting from the COVID-19 pandemic,” Neves added. “The Luxury New Retail initiative will explore ways we can help the wider industry move forward and thrive in the post-COVID world.”
Daniel Zhang, chairman and CEO of Alibaba Group, said: “This highly complementary partnership brings together some of the world’s leading luxury retail and technology platforms, representing another milestone in Alibaba’s strategy to meet the rapidly growing demand for luxury products in China. The Chinese luxury market – which is expected to account for half of global luxury sales by 2025 – consists of hundreds of millions of young, digitally-native consumers. By partnering with Farfetch and expanding our existing relationship with Richemont, we will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.”
Johann Rupert, chairman of Richemont, added: “Building on our successful joint venture with Alibaba, these developments represent a further meaningful acceleration of our journey towards Luxury New Retail. This initiative brings together a powerful combination of highly complementary strengths – notably with our Maisons’ luxury retail expertise and Yoox Net-A-Porter’s deep brand partnerships, expert curation, and exceptional customer care – that will help us deliver a seamless omnichannel experience to our discerning clientele. Partnerships make you stronger. I am delighted to partner with Daniel, José, and François-Henri to bring our shared vision to fruition, setting new standards for the future of luxury.”