Mayhoola denies plan to sell Valentino brand

Mayhoola denies plan to sell Valentino brand

Qatar-backed investment fund Mayhoola has dismissed reports that it is considering selling the Valentino fashion house, which it co-owns with French luxury group Kering. The denial comes amidst Kering's ongoing internal portfolio review and Valentino's recent financial and operational challenges.

The denial was made by Mayhoola chief executive Rachid Mohamed Rachid, who stated that the news was "untrue." Kering declined to comment on the matter. The speculation emerged from an article published by Italian newspaper Corriere della Sera, which reported that Kering and Mayhoola were evaluating a potential sale of Valentino [1].

Kering acquired a 30% stake in Valentino in 2023 for $1.7 billion, with a commitment to purchase the remaining 70% by 2028. The acquisition was seen as a strategic move to establish a second flagship brand rooted in couture. However, the timing of the acquisition coincided with a global luxury slowdown, raising concerns among investors [1].

Valentino has faced several challenges recently. Its CEO, Jacopo Venturini, was placed on medical leave, and its handbag division was placed under court administration due to labor violations in its supply chain. Additionally, the fashion house reported a 2% decline in revenue at constant exchange rates in 2023, totaling €1.31 billion ($1.52 billion) [2].

Kering's shares initially climbed by 2.5% following the Corriere article but lost momentum after Mayhoola's denial. The speculation comes amid Kering's internal portfolio review, as the group faces mounting debt and industry-wide headwinds. Under pressure to free up capital, Kering has been evaluating its asset structure under the leadership of newly appointed CEO Luca de Meo, set to officially begin his role on September 15 [1].

Kering's investments in various prestigious brands and properties have led to a significant increase in debt. According to Bernstein analysts, Kering's overall investments could amount to around €14 billion, with debt reaching €10.5 billion. The luxury industry's slowdown has caused difficulties for Kering's flagship brand, Gucci [3].

The potential sale of Valentino could be a significant event for Kering and Mayhoola. The valuation of Valentino's remaining 70% stake has not been set, but Bernstein analysts estimate that the disbursement could be around €3.4 billion. Kering's cash outlay for its 70% stake in Valentino would remain very significant, given the current stock market valuation of the stake at just over €570 million [3].

The next strategies for Valentino will be in the hands of Luca de Meo, who is expected to take charge of Kering on September 15. Industry experts predict a recovery in the fashion sector in 2026, but the sector must contend with geopolitical tensions and the specter of a trade war [3].

References:
[1] https://be.fashionnetwork.com/en-be/news/Mayhoola-denies-speculation-of-possible-valentino-sale-with-kering,1750327.html
[2] https://ca.fashionnetwork.com/news/Valentino-sale-under-consideration-by-kering-and-mayhoola,1750365.html
[3] https://www.firstonline.info/en/Valentino-Kering-and-the-Mayhoola-fund-are-evaluating-the-sale-of-the-historic-fashion-house%27s-accounts-and-what-Qatar-says./