Italian fashion house Valentino has been snapped up by a Qatari group for €700m ($857.5m).
The luxury label loved by Jacqueline Kennedy Onassis and Audrey Hepburn said yesterday that Mayhoola for Investments S.P.C, an investment vehicle backed by a Qatar group, had bought it from UK-based private equity fund Permira and minority investors the Marzotto textile entrepreneurs. Valentino did not disclose financial details of the sale or name the investor.
But two sources close to the deal said 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 jewellery 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 forecast EBITDA.
Analysts said the Qatar, 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 & 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 percent 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.
Through the deal, Qatar also acquires control of the casualwear licenced 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 Qatar group, while Mediobanca and UniCredit advised Valentino.
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