Yoox Net-a-Porter sells a $113 million stake to a Dubai mall founder
April 19, 2016 10:46 AM
(Bloomberg)—Yoox Net-a-Porter agreed to sell a 100 million-euro ($113 million) stake to the founder of Dubai-based developer Emaar Properties PJSC to help the world’s largest online luxury retailer expand in the Middle East.
Alabbar Enterprises, controlled by Emaar chairman Mohamed Alabbar, will buy new shares amounting to 4% of YNAP, the Milan-based retailer said in a statement Tuesday. The shares rose.
The transaction unites the online retailing partner for brands like Armani and Moncler with the operator of the world’s largest shopping mall in Dubai. As a strategic investor, Alabbar can provide insights and support to YNAP in the Middle East, which represents 5% of global luxury spending, the Italian company said.
“We also believe that such an agreement with a key wholesaler should also help YNAP strengthen its relationships with luxury brands,” said Mauro Baragiola, an analyst at Citigroup in Milan. “We increasingly find it difficult to see why bearish investors on YNAP should remain such.”
The deal should also help Alabbar deepen ties with Middle Eastern shoppers as tourist spending fades and a rival mall opens this year in neighboring Qatar. Burberry Group Plc and Prada SpA said this month their sales in the region have been hurt by a lack of visitors, particularly in Dubai. Luxury sales grew 1% in the Middle East last year, slowing from a 4% gain in 2014, excluding currency swings, according to Bain & Co.
The online retailer has experienced “remarkable” growth in the region even without offering products tailored to local clients, the company said. This “is further testament to the group’s significant potential in this flourishing market,” YNAP said.
YNAP will use the funds to invest in technology and “high-potential geographies,” while retaining maximum balance-sheet flexibility, it said. Yoox is No. 72 in the Internet Retailer 2015 Europe 500 while Net-A-Porter's former parent company, Richemont SA, was No. 31.
The company had planned to sell as much as 200 million euros of stock following the merger that led to its creation last year. Cash requirements are lower than previously estimated and the board does not plan to raise the remaining 100 million euros, YNAP said in the statement.