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Qatar's sovereign wealth fund is buying a 19.9 per cent stake in Sogo department store operator Lifestyle International Holdings for HK$4.78 billion, its third luxury department store investment in four years.
Lifestyle's controlling shareholder Real Reward agreed to sell part of its stake at HK$14.75 per share, it said in a filing to the stock exchange yesterday.
The transaction will be completed tomorrow, according to the announcement.
Real Reward is equally owned by Lifestyle's chief executive Thomas Lau Luen-hung's family trust and Chow Tai Fook Enterprises, which is controlled by the family of Cheng Yu-tung.
After the sale, Real Reward will own 32.27 per cent of Lifestyle.
Lau will remain as Lifestyle's chief executive and largest shareholder.
Qatar Investment Authority will become the second-largest and will also nominate a candidate to Lifestyle's board.
"It's a smart trade for Chow Tai Fook. It got a good valuation," said a banker with knowledge of the transaction. "A lot of the [negative] trends are affecting the broad Chinese retail space but Lifestyle is almost a kind of one-asset operation.
"Sogo in Causeway Bay drives most of its revenue and profit.
"Whatever the macro is doing has less of an impact.
"If you look from a marquee asset view, comparing to [New York-based] Bergdorf Goodman, their operating metrics are much better, sales per store, sales per square foot.
"You are investing in the sweet spot of the China retail story."
The banker said the deal was also part of Qatar Investment's strategy of picking up marquee luxury department store names.
Since 2010, the sovereign wealth fund has owned British upmarket department store Harrods.
In August last year, it paid €1.6 billion (HK$15.9 billion) to acquire French luxury chain Printemps.
JP Morgan Chase advised Chow Tai Fook on the deal while Merrill Lynch advised Qatar Investment.
Lifestyle also operates department stores on the mainland.
Shares of Lifestyle rose on resumption of trading yesterday, closing 1.37 per cent higher at HK$14.80. The stock had been suspended since September 24.
Sales from Lifestyle's two Hong Kong stores accounted for nearly 75 per cent of the group's total business last year.
Luxury retail sales in Hong Kong and the mainland have lost steam this year following an anti-corruption campaign and slowing macroeconomic growth.
The mainland luxury market shrank 1 per cent this year, a Bain & Co report said last week.
Industry sources say the Qatari fund is interested in a long-term view and is not concerned about cyclical volatility.
It plans to devote US$15 billion to boost its Asian portfolio including China, Japan and South Korea, according to the Financial Times.
"QIA's investment in Lifestyle International Holdings is a continuation of [the] QIA investment plan to diversify its global portfolio, this time in Asia," Qatar Investment said.
Lifestyle's operations have been slightly affected by the Occupy protests, with the protesters having set up camp just outside its Causeway Bay store.


Qatar sovereign fund buys 19.9pc of Sogo operator Lifestyle for HK$4.8b

Sales from Lifestyle's two Hong Kong stores, including Sogo, accounted for 75 per cent of the group's business last year. Photo: K.Y. Cheng

Lifestyle’s operations have been slightly affected by the Occupy Central protests, with the pro-democracy movement’s Causeway Bay encampment having been set up outside its Sogo store in the area. Photo: Bruce Yan

Sogo owners to spin off parts of property empire

Lifestyle International chief executive Thomas Lau is unsure whether Chow Tai Fook will retain its stake in the retailer. Photo: Nora Tam

Sogo operator banks on mainland shoppers' sprees

The Sogo stores in Causeway Bay and Tsim Sha Tsui had 7.8 per cent growth in sales revenue last year. Photo: May Tse

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The HK$4.78 billion sale will give the investment agency a 19.9 per cent stake in Lifestyle, part of a strategy of picking up luxury store names


Qatar's sovereign wealth fund is buying a 19.9 per cent stake in Sogo department store operator Lifestyle International Holdings for HK$4.78 billion, its third luxury department store investment in four years.


Qatar sovereign fund buys 19.9pc of Sogo operator Lifestyle for HK$4.8b

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The HK$4.78 billion sale will give the investment agency a 19.9 per cent stake in Lifestyle, part of a strategy of picking up luxury store names

The HK$4.78 billion sale will give the investment agency a 19.9 per cent stake in Lifestyle, part of a strategy of picking up luxury store names