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The Entertainer, a home-grown success story, is to write a new chapter overseas after selling half the company in a multimillion-dollar deal. Randi Sokoloff / The National
The Entertainer, a home-grown success story, is to write a new chapter overseas after selling half the company in a multimillion-dollar deal. Randi Sokoloff / The National

Abraaj deal new leaf for Entertainer book group

Abraaj Capital has purchased a 50 per cent stake in Dubai-based discounts business The Entertainer in a "multi-million dollar" deal.

The Entertainer, a home-grown success story, is to write a new chapter overseas after selling half the company in a multimillion-dollar deal.

The Dubai-based discounts business sold the stake to the regional investment firm Abraaj Capital in a move The Entertainer says will fund expansion outside the UAE.

Riyada Enterprise Development, a US$650 million (Dh2.3 billion) investment platform that is part of Abraaj, has acquired half of The Entertainer, executives said.

The company sells books of vouchers, including two-for-one deals for restaurants, hotels and day trips.

Donna Benton, the chief executive of The Entertainer, said the initial approach came from the investment fund last year.

"It's a multimillion-dollar deal," she said. "We've been talking for about 10 months."

The exact value of the deal was not disclosed. Riyada typically makes investments of between $500,000 and $15m, according to its website.

The Entertainer was set up by Ms Benton in 2000, with its first products appearing the following year. It currently sells discount books in seven markets, including the UAE, Saudi Arabia, Kuwait and Cyprus.

The investment by Riyada will help to fund its expansion into new markets, Ms Benton said. "By the end of 2013, we'll be in 13 countries with 22 books."

The firm opened an office in Singapore this year and Ms Benton said the company would start selling discounts books in markets such as Lebanon, Hong Kong and Malaysia. It was also evaluating markets such as South Africa and also in Europe.

Analysts said that the discounts business was growing in the Gulf, partly because of the rise of group buying sites such as LivingSocial and Cobone.

"It's definitely a growing market," said Sana Toukan, the research manager for the Middle East at Euromonitor International. "People no longer expect to pay the full price for anything."

However, Ms Toukan added that The Entertainer would face tough competition in some markets outside the Gulf region.

"It's not a new concept in Europe and the rest of the world," she said. "For certain markets, like the UK, they're going to face a lot of competition."

The Entertainer's revenue comes from the sales of books, which retail at several hundred dirhams, and fees charged to some of the companies behind the offers.

Tom Speechley, the chief executive of Riyada, said the investment company was predominantly buying into the relationships that The Entertainer had forged with local and global companies, such as Marriott International.

"Donna founded the business and it is very much about the relationships that the company has with its merchants," he said.

"That's the most valuable asset of the company. Everything we want to do with Donna and the team is only going to enhance the relationships with the businesses."

Members of the Riyada team will sit on The Entertainer board and the investment fund will look to leverage its relationships with other global companies and financiers to benefit The Entertainer. Ms Benton said she would remain the chief executive.

Mr Speechley added that the amount paid for a 50 per cent stake in The Entertainer reflected the current profitability of the company and its potential for success in three to four years.

The Abraaj investment will also allow the company to expand its online presence, although Ms Benton said The Entertainer would remain primarily a print-driven business. "Our books will always be our foundation. But we're also looking at a lot more digital offerings."

The company says it sold almost 100,000 books last year and is targeting sales of between 130,000 and 140,000 this year.

bflanagan@thenational.ae

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