Qatar Investment Authority, the country’s sovereign wealth fund, made a profit of around $892 million when it sold its shares in Tiffany & Co. as part of Louis Vuitton Moet Henessy’s $15.8 billion acquisition of the former.
The French luxury goods group finally completed the purchase of Tiffany & Co. last week. QIA had been a longstanding investor in the luxury jewellery brand, acquiring a stake of 5.2% in the company back in 2011.
Having bought more stocks in 2013, and then selling 4.4 million shares in 2017, bringing their final stake to 9.3%, QIA sold its remaining shares in Tiffany as part of a renegotiated deal where LVMH agreed to pay $131.5 per share to Tiffany’s shareholders.
The $1.55bn sale by QIA amounted to a total gain of around $892.3 mn, representing an internal rate of return of 9.3% from the sovereign fund’s total investment, according to Diego López, Global SWF managing director.
Best known for its diamond engagement rings, Tiffany’s last quarterly earnings indicated the retailer had started to recover from the impact of the coronavirus pandemic, with a 70% rise in sales in China and an e-commerce sales surge of 92% in the quarter.
The Tiffany stake was one of several glitzy purchases QIA made in the years after the global financial crisis of 2008 as it deployed the Gulf nation’s plentiful natural gas riches in assets ranging from German sports car maker Porsche to London’s Canary Wharf business district.
The new price of $15.8bn, a $425mn discount from the original price, was agreed to after the two brands agreed to end the bitter dispute triggered by the impact of COVID-19 pandemic on businesses. The two companies have also agreed to settle pending litigation which was filed by Tiffany & Co. in Delaware.
The deal is the luxury sector’s biggest to date.