AC Milan Bidder Said to Lose China State-Owned Firm Backing

  • Sino-Europe Sports said to be in talks about a new agreement
  • Haixia Capital said influenced by pressure from regulators

Luca Antonelli of AC Milan celebrates with his team-mates after scoring the opening goal during a match between AC Milan and Torino FC in Milan on Feb. 27, 2016.

Photographer: Marco Luzzani/Getty Images

The little-known Chinese group attempting to buy Silvio Berlusconi’s AC Milan soccer team has lost the backing of its state-owned partner, leaving businessman Li Yonghong to find a way to complete the deal on his own, people familiar with the matter said.

Haixia Capital Management Co. will no longer be an investor in Sino-Europe Sports Investment Management Changxing Co. after regulators at home stepped up criticism of sports deals, the people said, asking not to be identified because the talks are confidential. Haixia Capital may stay attached to the group in some capacity, one of the people said.

"If Chinese investors step back it wouldn’t be emotionally pleasant for my father, but it wouldn’t be seriously damaging since the fine for backing out of the deal is substantial," Mediaset SpA Chief Executive Officer Pier Silvio Berlusconi told reporters in Milan Wednesday. Mediaset is the Italian media company controlled by Berlusconi’s holding company Fininvest SpA.

As a result, Sino-Europe Sports and Fininvest are in discussions about a new deal for Associazione Calcio Milan S.p.A., which could be signed as soon as this week, two of the people said. The new agreement may involve finding alternative funding, they said.

Sino-Europe Sports would simultaneously agree to pay a third, non-refundable 100 million euro ($106 million) deposit for the club, and the closing could come in mid-April, they said. The group has already deposited 200 million euros.

Regulators in China have been ramping up their scrutiny of outbound investments, with their ire particularly focused on sports and entertainment. The General Administration of Sports warned in February of the risks around large, irrational overseas investments, including in soccer. Last week, People’s Bank of China Governor Zhou Xiaochuan said some purchases of overseas sports and entertainment assets didn’t fit with the nation’s industrial policy.

Financing Struggles

Haixia Capital, an investment firm controlled by State Development & Investment Corp., was the only co-investor named when Sino-Europe Sports first announced the deal in August last year. The consortium has struggled to put all the financing in place for its 740 million-euro purchase of the seven-time European champion team. 

Chinese authorities have blocked Sino-Europe Sports from transferring funds out of mainland China to buy AC Milan, people with knowledge of the matter said in February. 

A person who answered the phone at Haixia Capital’s office said the company doesn’t have anyone handling media queries, and an email sent to a general address listed on Haixia Capital’s website wasn’t answered. A spokeswoman for SDIC said she wasn’t aware of the issue. A representative for Fininvest declined to comment. Sino-Europe Sports didn’t have an immediate comment.

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