// Alibaba and Richemont will invest $300m each in Farfetch Limited and $250m each in Farfetch China
// Richemont, which owns Cartier, currently operates a joint venture with Alibaba in China
// The deal will mean each company receives a 25% stake as part of the new joint venture
Alibaba and Richemont are set to invest $300 million (£224 million) each in luxury online retailer Farfetch as the trio launch a Chinese joint venture.
On Tuesday, it was reported that Alibaba was in advanced discussions with Farfetch, a marketplace for independent fashion boutiques.
Swiss luxury group Richemont, which owns Cartier, currently operates a joint venture with Alibaba in China.
READ MORE: Farfetch gains “significant” market share despite ongoing losses
Now, Alibaba and Richemont will invest $300 million each in Farfetch Limited and $250 million each in Farfetch China.
The deal will mean each company receives a 25 per cent stake as part of the new joint venture that includes Farfetch’s marketplace operations in China.
It also means Farfetch will launch luxury shopping channels on Alibaba’s Tmall Luxury Pavilion and Luxury Soho platforms, and cross-border marketplace Tmall Global, giving Farfetch access to 757 million consumers.
The partnership will ”accelerate the digitization of the global luxury industry” by “leveraging each company’s respective expertise and reach”.
Meanwhile, Alibaba and Richemont can choose to purchase a further combined 24 per cent of Farfetch China after the third year of the joint venture’s formation, and will ”explore additional opportunities to work closely with Farfetch to provide services to luxury brands”.
Separately, investor Artemis is to up its holding in Farfetch with a $50 million share purchase.
“This announcement is a major step in our mission to connect the curators, creators and consumers of the luxury fashion industry,” Farfetch founder and chief executive José Neves said.
“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 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.
“The Luxury New Retail initiative will explore ways we can help the wider industry move forward and thrive in the post-COVID world.”
Alibaba chair and chief executive Daniel Zhang 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.
“We will accelerate the digitization of the global luxury retail industry and transform the luxury shopping experience for consumers.”
Richemont chairman Johann Rupert said: “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.”
Farfetch shares have doubled in the past six months and surged as much as 19 per cent in New York on reports of the potential deal, which would be Farfetch’s third major investment by a Chinese retailer.
The luxury online retailer benefited from the Covid-19 pandemic, after revenues rose 74 per cent in the second quarter during lockdown.
Farfetch is due to publish its quarterly results next week.
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