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Dubai Holding weighs sale of 25% stake in retail franchisee

Dubai Holding Azadea Group Creative Commons
Azadea, which operates Zara franchises in the Middle East, was valued at more than $1bn when Dubai Holding bought the 25% stake in 2018

Dubai Holding, the investment vehicle of Dubai’s ruler Sheikh Mohammed bin Rashid Al Maktoum, is weighing the sale of its minority stake in Azadea Group, which operates Inditex franchises in the Middle East including Zara, three people with knowledge of the matter told Reuters.

Dubai Holding has selected JPMorgan and Rothschild & Co to advise on the sale of a 25 percent stake it owns in Beirut-headquartered Azadea, said two of the sources, who declined to be named as the matter is not public.

Talks are at an early stages and no final decision has been made, all three sources said, adding it was too early to comment on valuation. Azadea was valued at more than $1 billion when Dubai Holding bought the 25 percent stake in 2018, one of the people said.

The sale may start next year and is set to attract interest from sovereign wealth funds, one of the people said, given a booming Middle East consumer sector as a predominantly young population spends its increasing wealth.

The Lebanese Daher family runs Azadea, which has had a partnership with Zara since 1998 and works with other major global brands. The company operates over 700 stores across the Middle East and Africa.

Azadea and Dubai Holding, which owns the world’s largest observation wheel, Ain Dubai, and hotel operator Jumeirah Group, did not respond to a request for comment.

JPMorgan declined to comment, while Rothschild did not immediately respond to a request for comment.

For Dubai Holding, the transaction is the latest in a number of exits by the state firm which seeks to recycle proceeds toward new investments, one of the people said.

The company sold its 50 percent interest in the Dubai Creek Harbour project to its partner Emaar Properties for AED7.5 billion ($2.04 billion) last year.

It also sold a 12.5 percent stake in Dubai business park operator Telcom Group last year through an initial public offering which raised AED1.7 billion.