Farfac shares soar after $ 1.15 billion Alibaba, Rickmont, Artemis investment


Farfach, a partnership between Alibaba and Rickmont, includes expansion into China

Farfetch / Alibaba / Richemont

Shares of luxury e-commerce retailer Farfek Ltd, FTCH,
+ 12.35%
It gained 11.1% in Friday trading, after which it announced a partnership with Alibaba Group Holding Limited Baba.
+ 4.25%
And c. Financiac Richemont SA CFR,
+ 8.89%
Which includes expanding into the Chinese market and investing $ 600 million.

The Richemont label includes Cartier, watchmaker Piaget and fashion brand Chloe.

It was previously reported that Alibaba’s investment in Farfac is about to come.

Farfetch will launch shopping channels on Tmall Luxury Pavilion, Tmall Global and Luxury Soho, reaching 757 million consumers.

Read: Ricmont jumps on results, Alibaba partnership

Alibaba and Rickmont will invest $ 300 million in Farafek. The investment will be through the purchase of 0% convertible senior notes due to the issuance of 2030 fake notes. Alibaba and Rickmont may require Farfach to repurchase all or some notes at full price on June 30, 2026.

Alibaba and Rickmont will also invest $ 250 million in a new joint venture, Farfac China, with a 25% stake each. The two companies will have the option of taking another joint 24% stake in the venture after the third year.

These investments are expected to close during the first half of 2021.

“The Chinese luxury market – which is expected to account for half of the global luxury sales by 2025 – has millions of young, digital-native consumers,” Alibaba CEO Daniel Zhang said in a statement.

Artemis, an investment company founded by François-Henri Pinault, the chief executive of luxury fashion company Kering Kerr.
+ 0.42%,
It has increased its Farfetch investment by $ 50 million.

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The Kering label includes Gucci, Saint Laurent and Alexander McQueen. Artemis is a controlling shareholder in Kering, and owns several other companies, including Christie’s auction house and Chateau Latour vineyard.

“The new initiative, along with the Alibaba Group and Rickmont, has expanded Farfitch’s strategy to power the digital transformation occurring in the luxury industry, accelerated by the unprecedented challenges posed by the COVID-19 epidemic,” José Neves, Farfetch CEO, said in a statement. .

All companies will join their efforts to pursue the luxury new retail initiative, creating solutions including e-commerce websites and apps for luxury brands.

“The growth potential of luxury e-commerce has never been so promising, and China’s importance to the luxury industry is becoming more apparent every day,” Pinaul said in a statement.

Amazon.com Inc. News comes in the form of AMZN,
-0.32%
The launch of luxury stores also puts a digital flag in the online luxury business, which came out in September on an invitation basis with Oscar de la Renta.

In a note, Wells Fargo analysts wrote, “With strong fundamentals, Farfach has shown compelling opportunities as of late and from China’s joint venture, Farfac’s long-term growth opportunities are more visible.

In addition, Wells Fargo Online exposes the potential for growth in the luxury space.

“[D]Analysts said that while online adoption (due to the old customer base) is somewhat unfavorable, but now that tech experts have been accumulating wealth for millennia, online penetration should accelerate for the luxury industry.

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Wells Fargo states that the online luxury market could reach $ 112 billion in sales by 2025, currently exceeding $ 28 billion.

Nevertheless, analysts believe that when the journey resumes after COVID-19, luxury shoppers will return to the shops, which boggles the question of how much online luxury shopping will continue. This may hurt Farfach.

Wells Fargo rates the par weight of Farch’s stock with a $ 42 price target.

The stock of Farchat has skyrocketed over 300% for the year to date. Alibaba grew 41.2%. And Richemont stock, which is up nearly 9% in Friday trading, has fallen 9.2% so far by 2020.

Promote online retail ETF IBUY
+ 0.72%
Increased by more than 96% in 2020 and the benchmark S&P 500 index SPX,
-0.02%
Up to 8.5%.

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