x Abu Dhabi, UAE Friday 21 July 2017

Cavalli cafe brand set for $150m Middle East expansion

A Lebanese company launches a US$150 million plan to develop a chain of Roberto Cavalli-branded clubs and cafes across the Middle East, Asia-Pacific and South America.

Cavalli Club Dubai: Pragma Group has extended the brand partnership with a $150m investment to open new.
Cavalli Club Dubai: Pragma Group has extended the brand partnership with a $150m investment to open new.

A Lebanese company has launched a US$150 million (Dh550.9m) plan to develop a chain of Roberto Cavalli-branded clubs and cafes across the Middle East, Asia-Pacific and South America.

Pragma Group, based in Beirut, currently operates the Cavalli Club at the Fairmont hotel in Dubai through a licence agreement with the Italian fashion designer.

It has now signed a new agreement to extend this partnership to 15 Cavalli Cafes and five branded nightclubs in several new markets.

Joe Tabet, the chairman of Pragma, said $150m was "an indication" of the total cost of development in the five-year plan, under which the company hoped to form 50:50 partnership deals with local players in each market.

"On average, a Cavalli Club would cost around $12 million," he said. "[For the entire project] $150 million is a good benchmark." About $75m will be contributed by Pragma, financed through an investment fund launched by the group this year.

Pragma has a 40 per cent stake in the fund, with the rest of the financing contributed by institutional investors, said Mr Tabet.

He declined to name potential partners with which the group has been in discussions.

"The profile of the local partner is [one] that has access to real estate, and prime real estate because location is key," he said.

"The second [aspect] is to have enough funds to participate in 50 per cent of the venture."

Dubai's Cavalli Club has a capacity of 1,800, but Mr Tabet said the international clubs could be smaller.

In the first two years of the plan, the company is looking to launch two clubs and three cafes in different locations.

"As we speak today, in terms of clubs, our main focus will be Beirut.

"I think Beirut will be the only city that we will be focused upon in the Middle East," said Mr Tabet. "Istanbul also is on an advanced stage. Hopefully we will start the rollout by March."

The Cavalli Cafe concept would be "everywhere", he said, pointing to markets such as Saudi Arabia, Doha, Bahrain and Cairo.

Under the terms of the deal, the Cavalli Group will not invest directly in the clubs or cafes, but will receive royalty payments for use of the brand name. "It's a master licensing agreement, where they have a royalty and a percentage of turnover, plus they do the branding with us," said Mr Tabet.

The Cavalli Group also operates branded entertainment venues in Florence and Milan.

Pragma has already entered into a partnership with Flavio Briatore, the former Formula One team boss, as part of a $150m acquisition and redevelopment of the Palladium building in Dubai.

Mr Briatore has franchised his Billionaire brand to Pragma, which plans to renovate the Palladium conference centre in Dubai Media City and turn it into a "lifestyle destination" with restaurants, a 55-room hotel, a club and a fitness centre. As far as launching high-end developments in the present economic climate, Mr Tabet said: "We are in the high end of the market, and we haven't been feeling that hit.

What the recession has done is to filter the market.

When the liquidity got affected, only the few, and the good professional people stayed in the market.

"The growth of our business, year-on-year from 2008 until now, was 30 per cent. Which means something, because the parasites were out of the market, and only the people who could sustain operations stayed."

bflanagan@thenational.ae