October 20, 2014 / 2:31 AM / 3 years ago

UPDATE 1-Qatar fund to buy stake in HK department store operator for $616 mln

* Qatar to buy 19.9 pct stake in Lifestyle, to get one board seat

* Deal follows Temasek’s purchase of a 25 pct stake in A.S. Watson

* Lifestyle shares down 5.9 pct (Adds other Hong Kong retail M&A, names of financial advisors)

By Denny Thomas

HONG KONG, Oct 20 (Reuters) - Qatar Holding LLC has agreed to pay $616 million for about one fifth of Lifestyle International Holdings, a department operator in Hong Kong and mainland China - the latest addition of a high-end retail brand to the sovereign wealth fund’s portfolio.

Lifestyle’s stores include a SOGO branded store in Hong Kong’s bustling shopping district of Causeway Bay and four Jiuguang stores on the mainland.

A unit of Qatar Holding will pay HK$14.75 per share for the 19.9 percent stake, a 1 percent premium to Lifestyle’s last traded price of HK$14.60, the statement added. Qatar Holding will get one board seat on the completion of the transaction.

Lifestyle shares fell 5.9 percent on Monday as trading resumed after they were halted on Sept. 24 pending an announcement. The fall partly reflects broad weakness in the market since September.

Qatar Holding acquired London’s Harrods Group in 2010 for 1.5 billion pounds. It also owns a 12.6 percent stake in Tiffany & Co, according to Thomson Reuters data.

“This investment in Lifestyle International Holdings is a continuation of QIA’s investment plan to diversify its global portfolio; this time in Asia,” Qatar Investment Authority, the parent company of Qatar Holding, said in a statement.

Bellshill Investment Co, a unit of Qatar Holding, is buying the shares from Lifestyle’s dominant shareholder, Real Reward Ltd, which is equally controlled by a unit of Chow Tai Fook Jewellery Group Ltd and the family of Hong Kong businessman Thomas Lau.

The deal marks the second partial exit from the retail sector by a Hong Kong tycoon, following last year’s move by Li Ka-shing to sell a 25 percent stake in A.S Watson to Singapore state investor Temasek Holdings for $5.7 billion.

Real Reward did not give a reason for the stake sale, but a person familiar with the deal said Qatar’s experience in running Harrods is expected to help SOGO’s operations.

J.P. Morgan is advising Chow Tai Fook, while Bank of America Corp is advising Qatar Holding, the person added. The person was not authorised to speak to the media.

J.P Morgan declined to comment, while Bank of America did not respond to an email seeking comment.

1 US dollar = 7.7571 Hong Kong dollar Reporting by Denny Thomas; Editing by Stephen Coates and Edwina Gibbs

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