Italian fashion house Valentino has been snapped up by the Qatari royal family for €700-million ($857.5 million U.S.), 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 U.K.-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 told Reuters the royals of the tiny Gulf state of Qatar, among the world's most active investors, had acquired Valentino for €700-million, 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 a huge premium against current average valuations for European luxury brands which stand at 10 to 11 times 2012 forecast EBITDA.
Analysts said the Qatari royal family, which also owns London's Harrods department store, appeared to be building a homegrown 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 per cent 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 men's wear retailer Trinity Ltd. bought Italian tailor Cerruti for $70-million.
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' other assets range 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 casual-wear 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 €5.3-billion in one of the largest deals in Europe that year.