Qatar fund buying Balmain shows Middle Eastern investors’ hunger for luxury labels
High-fashion business is a good fit for Qatar, whose fund Mayhoola For Investments has snapped up French fashion house Balmain; Persian Gulf an increasingly important fashion market
The acquisition of Balmain, the Paris fashion house, by Mayhoola for Investments, a Qatar-based fund, is the latest sign of Middle Eastern investors’ appetite for luxury goods. The spree makes sense: that region’s market is probably the best suited to the industry’s business model and culture today.
Mayhoola, which is reportedly buying Balmain for about €500 million (HK$4.4 billion), already owns Italy’s Valentino, acquired in 2011. The fund is linked to Sheikha Mozah, the mother of the Qatari emir, but its name means “Unknown”, and it doesn’t disclose its owners.
Qatar itself has invested heavily in the luxury business through its sovereign wealth fund, buying 1 per cent of the French holding LVMH, 38 per cent of UK accessories brand Anya Hindmarch, 11.3 per cent of Tiffany, and controlling stakes in the French department store chain Printemps and London’s Harrods.
The Qataris are not the only high-profile Gulf investors in the fashion industry. Investcorp, the Bahrain-based fund that bought Gucci at the end of the 1980s and took it public in 1996, is reportedly close to acquiring the Italian menswear brand Corneliani. In April, Dubai-based Alabbar Enterprises bought into the upscale online fashion retailer Yoox Net-a-Porter.
The affluent residents of oil-rich Gulf states have always craved European luxury. They are among the biggest shoppers in the UK and Germany. Half of Middle Eastern visitors to France spend more than US$6,600 a day.
A 2014 white paper on the peculiarities of luxury consumption in the Gulf nations included an explanation from a big local luxury retailer, the Chalhoub Group, of the origins of this love affair: a tradition of defining a person’s place in society through luxury consumption, the emergence of malls, where people from a culture “dominated by private spaces and prescribed behaviour” can show off their individuality, and the cultural importance of trust that helps create strong brand loyalties.