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Farfetch Eyes China Expansion With $250 Million Investment

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Farfetch, an online luxury fashion platform, has raised $250 million from China-based Tencent Holdings and Dragoneer Investment Group to support its global growth initiatives. Both Tencent and Dragoneer committed $125 million each.

The additional capital supports Farfetch’s long-term strategy of delivering a global technology platform for the luxury fashion industry by executing its growth plans, particularly in China, and driving it towards operational profitability.

With the investment, Farfetch gains greater access to users on Tencent’s WeChat social media platform, which boasts an estimated 1 billion monthly active users, the large majority of whom live in China. Farfetch currently powers more than 80 luxury brands on WeChat, including Moncler, Balenciaga, Saint Laurent, Armani and Ralph Lauren, and is a partner to these brands for new developments and launches on the platform.

“Tencent’s deep technology expertise and ongoing relationship with Farfetch, paired with Dragoneer’s expertise in supporting growth-oriented technology companies, makes both investors outstanding partners to support Farfetch’s next chapter of growth,” said José Neves, Founder, CEO and Co-Chair of Farfetch in a statement. “As we continue to execute on our long-term strategy, we believe that this investment supports Farfetch in delivering on the significant opportunity we see and scaling our business to achieve profitability in the medium term.”

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Farfetch’s ambitions for expansion in China come at a time when another major luxury marketplace is gaining steam, suggesting that the market is ripe for more luxury goods. More than half (51%) of luxury fashion brands in the 2019 Gartner Luxury China Index now operate official flagships on Alibaba’s Tmall Luxury Pavilion, up from only 27% in 2018. Luxury brands that now sell on Tmall include Michael Kors, Net-a-Porter, Valentino, Versace, Coach, Bottega Veneta, Givenchy and Burberry.

Farfetch has been a big spender since filing for an IPO in August 2018. The company acquired Stadium Goods for $250 million in December 2018, and then in August 2019 acquired New Guards Group, a brand platform that has launched several global luxury fashion brands, for $675 million.

The funding will immediately bolster Farfetch’s liquidity. As of Dec. 31, 2019, the Company’s cash and cash equivalents balance amounted to approximately $320 million.

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