Alibaba eyeing up a stake in luxury platform Farfetch

Chinese e-commerce giant Alibaba is rumoured to be set to invest $300m to buy a stake in British-based, New York listed online luxury platform Farfetch.

The rumours sent Farfetch's shares up nearly 14% to $32 yesterday, giving it a market value of $10.9bn, though the firm has so far declined to comment.

Alibaba would join fellow Chinese e-commerce giant JD.com as a shareholder in the business founded in London by Portuguese entrepreneur José Neves in 2007.

Neves has previously said that the platform, which boasted a gross merchandise value of $2.1bn last year (though it is yet to make a profit), had been finding great success in China.

In light of the global pandemic affluent Chinese consumers are staying at home and not buying luxury in European capitals but spending their money domestically online and in-store.

The Information, a technology website, broke the news of Alibaba's interest in Farfetch and suggested that the investment could be a prelude to the two companies creating a Chinese joint venture.

It also reports that Swiss luxury conglomerate Richemont, which is the parent of Farfetch rival Yoox Net-a-Porter Group is interested in investing. 

Farfetch predominantly operates as a marketplace connecting luxury boutiques and brands globally to its 2.5m high-spending active customer base. There are currently around 1,200 luxury sellers represented on the platform. 

It also white labels its platform to power the e-commerce businesses of a number of luxury brands and owns British luxury business Browns and Italian group New Guards, parent of Off-White among other desirable brands.