Milan/London - Italian fashion house Valentino has been
snapped up by the Qatari royal family for €700m, the latest purchase of a top
European luxury brand by an emerging market investor.
The luxury label loved by Jacqueline Kennedy Onassis and
Audrey Hepburn said on Thursday that Mayhoola for Investments S.P.C, an
investment vehicle backed by a leading Qatari, had bought it from UK-based
private equity fund Permira and minority investors the Marzotto textile
Valentino did not disclose financial details of the sale or
name the investor.
But two sources close to the deal told Reuters the royals of
the tiny Gulf state of Qatar, among the world's most active investors, had acquired
Valentino for €700m, or 31.5 times its 2011 EBITDA.
That's well above LVMH's purchase of jewelry maker Bulgari
last year at 28.2 times its EBITDA and is a huge premium against current
average valuations for European luxury brands which stand at 10-11 times 2012
Analysts said the Qatari royal family, which also owns
London's Harrods department store, appeared to be building a home grown luxury
brand with this latest purchase.
"It's the kind of thing that fits in well with Qatar:
iconic, quality brands, with a long-term value and an appealing customer
base," said Rachel Zeimba, a senior analyst at Roubini Global Economics.
Founded in 1960 by designer Valentino Garavani, the Italian
brand acquired global fame thanks to its trademark bright-red chiffon dresses,
loved by princesses and Hollywood stars alike.
It was hit hard by the recent financial crisis and had to
restructure its debts in December 2009, struggling to keep up with competition
from glamorous new brands like Dolce e Gabbana.
However, a recent surge of interest in the high-end luxury
sector from super-rich clients who are not feeling the economic pinch has
helped its fortunes. Valentino's EBITDA grew 300% in 2011 and is
expected to grow significantly in 2012.
Valentino is the latest Italian luxury brand to be bought by
a foreign investor, a sign of the resilience of the strongest names even as
Italy sinks into a deep economic recession.
In December 2010, high-end Chinese menswear retailer Trinity
Ltd bought Italian tailor Cerruti for $70m.
In 2011, Dubai retailer Paris Group bought near-bankrupt
fashion house Gianfranco Ferre.
Analysts expect the luxury sector to continue to attract
investors with deep pockets even in the tough climate, particularly as there
are few new listings to tempt them.
"We can expect to see many more individual investors
looking at European luxury. The IPO market is tough and emerging market players
from China and the Middle East are the main players now," said a
Paris-based luxury goods analyst.
The Qataris also own assets ranging from stakes in German
sports car maker Porsche to shares in British bank Barclays. Analysts say their
latest luxury purchases were spearheaded by the chic wife of the Qatari Emir,
Sheikha Mozah, who is known for loving Valentino dresses.
She owns the Qatar Luxury Group, which has a stake in French
leather goods maker Le Tanneur & Cie.
Through the deal, the Qataris also acquire control of the
casualwear licensed M Missoni line. Marlboro Classic, another sporty brand,
will remain under Red & Black, the Permira-controlled vehicle which also
owns a main stake in Germany's Hugo Boss.
Perella Weinberg Partners was the adviser for the Qataris,
while Mediobanca and UniCredit advised Valentino.
London-based Permira took control of Valentino Fashion Group,
which at the time included Valentino and Hugo Boss, at a market peak in 2007
for €5.3bn in one of the largest deals in Europe that year.