China's biggest property conglomerate, Dalian Wanda Group Co, has bought 20 percent of Spanish soccer champions Atletico Madrid for 45 million euros ($52 million), becoming the first Mainland company to invest in a premier European club.
The purchase adds to a string of deals as Wanda expands overseas and diversifies away from a weak domestic real estate market. Over the past two years, the company agreed to invest nearly $2 billion in London and Madrid hotels and properties.
Investing in Atletico tallies with Wanda's push into entertainment. Billionaire founder Wang Jianlin has said he wants to expand in theme parks and motion pictures, pitting the group against Walt Disney Co and Universal Studios.
The choice of club would come as no surprise as the company established a youth training program with Atletico three years ago aimed at "strengthening the quality of Chinese football," Wang said at a signing ceremony on Wednesday.
Under terms of the investment, Dalian will spend an additional 15 million euros on 50 percent of a new Atletico youth training facility.
Buying into Atletico will offer significant branding opportunities in Europe for Beijing-based Wanda. For Atletico, whose debt exceeds 500 million euros, the partnership could help introduce the club to new Chinese fans and sponsors.
"The Asian market is the largest and every European club is working in Asia," Atletico's Chief Executive Officer Miguel Angel Gil Marin told Reuters at the signing ceremony.
"The idea is to increase (our) base of supporters and increase our revenues around sponsorship agreements.
Atletico's recent success has brought Madrid's second club to the attention of international investors. Its partners include Chinese telecommunications equipment maker Huawei Technologies Co Ltd [HWT.UL] and the Azerbaijan tourist board.
Wang Jianlin is no stranger to soccer. For six years from 1993, his group owned Dalian city's local team.
Wanda currently includes Hong Kong-listed Dalian Wanda Commercial Properties Co Ltd, joined in 2012 by U.S. movie theater chain AMC Entertainment Holdings Inc. The group is also the leading shareholder of China's biggest theater chain, Wanda Cinema Line Corp.
Last week, Wang said he aimed to increase group revenue by 147 percent to 600 billion yuan ($96.60 billion) by 2020, with more than 20 percent coming from overseas. International revenue is presently negligible.