Qatar’s purchase of a stake in a Hong Kong department store chain is the beginning of a potential $15bn spending spree targeting China, Japan and South Korea, according to people familiar with the Gulf state’s plans.
Qatar Investment Authority, which owns stakes in Harrods, Barclays, Credit Suisseand Canary Wharf Group , on Monday said it would pay $616m for a near-20 per cent stake in Lifestyle International Holdings, owner of Hong Kong’s SOGO department stores.
The investment arm of the Qatari government aims to spend up to $15bn in the medium to long-term to bolster its presence in north Asia, according to people familiar with the matter. Singapore is also a potential target for investment.
QIA made headlines in 2010 with a $2.8bn cornerstone investment in Agricultural Bank of China’s initial public offering, but has since kept a low profile in the region, focusing on opportunities elsewhere.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
“QIA’s investment in Lifestyle International Holdings is a continuation of QIA’s investment plan to diversify its global portfolio; this time in Asia,” said the fund, adding that the deal would diversify its retail investments, which include a stake in Tiffany & Co, the luxury jeweller, as well as Harrods, the London department store.
SOGO is a mid- to upmarket retailer and its flagship store is in the popular Causeway Bay shopping district. The store was recently in the news when the territory’sOccupy Hong Kong protesters set up in front of it, although the outlet remained open.
Lifestyle International, which last year made profits of HK2.7bn ($344m) also operates Jiuguang department stores in mainland China.
Qatar paid HK$14.75 a share for its 19.9 per cent stake in Lifestyle, a slight premium to the stock’s last traded price of HK$14.58. The shares fell 5.6 per cent to HK$13.78 by midday in Hong Kong following the news – a drop that roughly matched wider market weakness since the stock was suspended, pending this announcement, in late September.
The deal gives Qatar a seat on a board alongside two of Hong Kong’s best-connected tycoon families. QIA is buying the shares from the Lau family – Thomas Lau is chief executive – and Chow Tai Fook Enterprises, the private investment vehicle of the Cheng family.
“Lifestyle International were looking for a strategic long-term investor in the business, like Chow Tai Fook have been,” said one banker involved in the deal.
After the deal, the Lau family will hold 37 per cent, down from 47 per cent and the Chengs 16 per cent, down from 26 per cent. Both Henry Cheng, chairman of New World, and Cheng Yu Tung, his father and family patriarch, are board members.
Cheng family companies include Chow Tai Fook, the world’s biggest listed jeweller, and the New World empire spanning property development, retail and hotels.
Date: October 20, 2014