Gulf sovereign wealth group new owner after 'global auction' of British landmark business.
Qatar fund pays £1.5bn for Harrods luxury store
Qatar Holding, the sovereign wealth fund, has bought the luxury London department store Harrods for a reported £1.5 billion (Dh8.15bn) in the most high-profile Gulf acquisition this year. The deal marks a rare handover of ownership of Harrods, which has now only been sold four times in its 176-year history.
Mohammed al Fayed, the controversial businessman who cut his teeth in Dubai in the 1960s, and his brothers bought the store for £615 million in 1985. Ken Costa, the chairman of Lazard International and an adviser on the deal, confirmed the sale in a statement yesterday. "After 25 years as chairman of Harrods, Mohammed al Fayed has decided to retire and to spend more time with his children and grandchildren," Mr Costa said.
"Qatar Holding was specifically chosen ? as they had both the vision and financial capacity to support the long-term successful growth of Harrods." As well as the 1.8 hectare department store in Knightsbridge, Harrods has subsidiaries involved in banking, aviation and property. Ahmad al Sayed, the chief executive and managing director of Qatar Holding, called the acquisition a "privilege" and announced that Mr al Fayed had accepted the role of honorary chairman.
Founded in 1834 with the motto "Omnia Omnibus Ubique" (All things for all people, everywhere), the store has become synonymous with luxury retailing. Shoppers can buy everything from a 12.5kg hunk of gold to fine teas and couture clothing. "This is a landmark deal, in every respect," said Blair Hagkull, the managing director of Jones Lang LaSalle MENA. "Harrods is at one level a retail operation but it is also a global destination."
The sudden announcement yesterday came after two months of rumours of discussions between Mr al Fayed and Qatar Holding. Harrods said in a statement on March 30 that the store "is not for sale and is not being sold". It also sent out a note to its staff saying that a sale was not imminent, according to The Sunday Times. "People approach us from Kuwait, Saudi Arabia, Qatar. Fair enough, but I put two fingers up to them all," Mr al Fayed said, according to the newspaper. "It is not for sale. This is not Marks & Spencer or Sainsbury. It is a special place that gives people pleasure."
According to a London source close to the deal, Harrods has been for sale for the past nine months, with the investment bank Lazard conducting what amounted to a global auction of the business. "They tried to find a buyer everywhere but only Qatar was interested enough," the source said. Qatar was on the verge of clinching a deal at the end of March, with a price tag of about £2bn, when Mr al Fayed asked for £100m more at the last minute. The Qatar Holding team, under the former Credit Suisse banker Anthony Armstrong, walked away.
While many investors have pulled back from property investments after the global recession, Qatari companies have been focusing on prime London buildings. Qatari Diar, which is part-owned by the government of Qatar, has stakes in two of London's largest development projects, Chelsea Barracks and the Shard Tower. Qatar Holding, which is the private investment arm of Qatar Investment Authority, bought a 24 per cent stake in Songbird Estates - a company that owns more than half of the buildings in London's Canary Wharf.
Qatar Holding's first task will be to find an experienced retail management team to run Harrods and oversee an international growth strategy. In addition to the famous London store, Harrods in recent years has opened concessions at London airports but has not embarked on a full-scale international expansion, despite persistent rumours that it was to open a branch in Dubai. firstname.lastname@example.org email@example.com