SHANGHAI - Fosun International, one of the largest privately owned conglomerates in China, further expands its overseas presence by acquiring a 9.5 percent equity stake in Greece-based jewelry and luxury goods retailer Folli Follie Group (FFG).
Shanghai-based Fosun International, owned by billionaire Guo Guangchan, purchased a total of 6.36 million common shares from FFG through a private placement. The deal will be settled at around 84.58 million euros ($121 million).
Fosun will become one of the largest shareholders in FFG and will appoint a representative on the board of directors.
"Folli Follie's concept of 'affordable luxury' will be a perfect match for the growing consumption demands in China. We will make good use of our local resources and network to help Folli Follie explore more business opportunities and reach more customers in China who can afford luxury products," said Guo.
"We believe the demand for fashion and personalized products will increase at a rate higher than (China's) gross domestic product growth rate."
Guo, chairman of Fosun, said the deal will help boost FFG's presence in China through the setting up of more retail stores.
"This partnership will mutually benefit both companies, empowering the FFG's presence in China and Fosun's presence in Greece," said Dimitris Koutsolioutsos, the founder of FFG.
Guo said the consumer market will continue to develop in China in the next few years and will provide more business opportunities for overseas luxury brands like FFG.
Consulting firm Bain and Company projected that sales revenue for luxury goods in China will reach 11.5 billion euros this year, a 25 percent increase from 2010. China will be the largest luxury goods consuming destination.
Folli Follie entered into Chinese market in 2002 and is operating more than 100 stores in 28 cities across China under the brands Folli Follie and Links of London.
Koutsolioutsos said he hopes more than 250 Folli Follie's retail stores will be opened in China in the next three years, including duty free stores.
In recent years, Fosun had invested in the high-end consumer sector through the acquisition of equity stakes in overseas companies. The group acquired a 9.5 percent equity stake in France-based luxury resort operator Club Med in June 2010.
When asked about whether Fosun is more interested in investing in high-end consumer sector, Guo said: "We are also seeking cooperation opportunities in lower-end market segment. However, we did not relay such information to the public."
The deal with FFG will not be the last of such investment targets for Fosun this year, he said.
"We hope others can understand that the development of China and the acquisition conduct by Chinese companies are not threats. We want to strengthen cooperation and collaboration with businesses around the world to introduce more brands into the Chinese market," added Guo.
Guo said he is not only interested in investing in the consumer sector but also seeking opportunities in resources and technology sectors.
The annual turnover for Fosun International reached some 44 billion yuan ($6.76 billion) in 2010. The company has investment in the pharmaceuticals, property and mining sectors.
