Qatar is a tiny oil rich country in the Persian Gulf. It has been in the news lately as its Prime Minister bought the most expensive condo in New York after being resisted by several co-op boards. With the oil prices reaching new heights the oil rich Persian Gulf state has been using its enormous wealth very intelligently. The country’s sovereign wealth fund, the Qatar Investment Authority has been at the forefront of several high profile acquisitions in Europe including London luxury store Harrods and several luxury hotels in France. The investors from Qatar seem to be focused on the luxury goods industry and are always on the lookout for global brands who have become vulnerable in the uncertain economic scenario. The latest news from the high end industry is that the Qatar’s royal family is buying storied Italian fashion house Valentino.
Qatar Valentino Deal Worth €700 Million
The deal hasn’t been announced officially as it was a private negotiation. However reliable sources familiar with the negotiations and the deal confirm that Permira, a private equity firm has agreed to sell the luxury fashion company Valentino Fashion Group to Mayhoola for Investments, a Qatari investment group. Permira owns the controlling stake in Valentino since 2007 when fashion designer Valentino Garavani who founded the label retired from his executive duties. The value of the acquisition is estimated to be between €600 and €700 million. Permira had got the control of the fashion house when they had acquired majority holding in German company Hugo Boss AG, for about €2.6 billion. With Valentino Garavani retiring they were unable to find a suitable replacement. It is never easy to find a successful designer for a fashion house.
Valentino is a Growing Brand
The acquisition of Valentino by Mayhoola for Investments for the Royal family seems to be part of a long term strategy. According to a statement released by Mayhoola, Valentino could very well become the platform for creating a global luxury goods powerhouse. Valentino has stores across the world from Singapore to Las Vegas. These stores sell a wide range of high end products including ready-to-wear garments, accessories and pricey haute couture outfits. The brand has remained focused in maximizing its potential. They have reported a growth of 23% in the first half of the year which must have been achieved mainly in the emerging markets. All brands haven’t been able to cash in on the growth of demand in the growing economies.
Permira is Restructuring Hugo Boss through this Deal
Permira, it is reported is working on restructuring the debt of Hugo Boss whose market value has risen to €6 billion excluding Valentino. It is highly likely that Permira will use the proceeds of the sale to pay down debt in Hugo Boss. The luxury brands from Europe have done particularly well in the emerging markets and have recorded handsome growth despite marked slowdown in Europe. These brands have become very attractive targets for take over. Perella Weinberg Partners and the law firm Chiomenti were representing Mayhoola on the negotiations. Mediobanca, UniCredit and the law firms Bonelli Erede Pappalardo and Freshfields Bruckhaus Deringer were the advisers to Permira for this deal. According to the reports about the deal Permira has retained the fashion brand MCS Marlboro Classics.
Via: online.wsj, dealbook.nytimes
