Chinese influence in decline as US fund Oaktree takes control of Inter Milan

(Photo Agency/Getty Images)
(Photo Agency/Getty Images)

US investment fund Oaktree Capital has taken control of Italian Serie A champions Inter Milan after the club’s Chinese owners Suning failed to meet a deadline for repaying a €395m ($428m) debt.

The deal takes one of Europe’s pre-eminent football clubs out of Chinese hands, following a trend that has taken place over recent years with Chinese investors withdrawing under pressure from the central government whose enthusiasm for football as a vehicle for enhancing its global power declined.

Indeed, China’s exit from European football has coincided with an increased appetite among US investors. In Serie A alone, Inter joins city rivals AC Milan, Atalanta, Fiorentina, Roma, Genoa and newly-promoted Parma in now being under American ownership.

Oaktree confirmed in a statement today (Wednesday) that it had assumed ownership of Inter following non-repayment of a three-year loan to Inter’s Chinese holding company Suning, which was one of the last remaining high-profile Chinese investors in European football.

Oaktree said the loan matured yesterday with a total balance due of approximately €395m. The US-based fund lent Suning €275m at an interest rate of 11 per cent in May 2021 to help the club get through the Covid-19 pandemic, having originally provided the finance for Suning’s 2016 purchase of the club.

At the weekend, Inter president Stephen Zhang criticised Oaktree, saying that Oaktree was threatening the club’s future while Inter chief executive Giuseppe Marotta said there nothing to worry about “from a financial point of view”.

Marotta is expected to stay in his position, with Oaktree keen to stress it is committed to working closely with the club’s current management team.

Alejandro Cano, managing director and co-head of Europe for Oaktree’s Global Opportunities strategy, said: “As new owners, we recognise our responsibility to Inter Milan’s community, history and legacy. We are committed to the long-term success of the Nerazzurri and believe our ambitions for the club are united with those of its passionate fans in Italy and around the world.

“Our initial focus is operational and financial stability. We have great respect for Inter Milan’s management team and look forward to working closely with them to provide strong leadership for the club.”

In October 2022, a month after posting an annual loss of €140m, Suning engaged US financial services institutions Raine Group and Goldman Sachs to find a buyer for Inter. The move came amid reports of financial troubles for the wider Suning group at home in China. Zhang, the son of the group’s founder, lost a court case in Hong Kong in September 2022, making him liable for $255m (€235.3m).

Chinese influence in decline

The situation at Inter has strong parallels with city rival AC Milan, where US fund Elliott took control in 2018 after Chinese owner Yonghong failed to make the final €32m payment of the €120m he had committed to acquire the club from former owner Silvio Berlusconi. Elliott subsequently sold the club to RedBird Capital in June 2022 in a deal reported to be in excess of €1bn.

There have been numerous other examples of Chinese investment waning.

In November 2022, China Media Capital (CMC) scaled back its investment in City Football Group (CFG), the parent company of English Premier League club Manchester City, selling a significant proportion of its stake to US fund Silver Lake. At one time CMC had held a 13-per-cent stake in CFG but the sale to Silver Lake reduced it to one per cent.

In 2018, Chinese conglomerate Wanda sold its 20-per-cent stake in LaLiga club Atletico Madrid, which had been the first major Chinese investment in a top-flight European football club, although Wanda retained a stadium naming-rights deal until 2022.

Chinese investor Fosun remains the majority shareholder at Premier League club Wolverhampton Wanderers although it sold its stake in the Swiss Super League’s Grasshopper Club Zürich in January.

Chinese investor Tony Xia, who bought Aston Villa in 2016, sold the Premier League club to V Sports, a company owned by the Egyptian billionaire Nassef Sawiri and American billionaire Wes Edens, two years later.

In February, American Shilen Patel completed the takeover of Championship club West Bromwich Albion from Chinese businessman Guochuan Lai.

In January 2022, Serbian media magnate Dragan Šolak acquired a controlling stake in then Premier League side Southampton from Chinese businessman Gao Jisheng, while last December the European arm of Chinese investment group CITIC sold top Czech club Slavia Prague to investor, entrepreneur, and lifelong fan, Pavel Tykač.

The deal, which also included Slavia’s Fortuna Arena, ended an over five-year spell where CITIC Europe Holdings had been the majority shareholder of the club.