MILAN, July 28 Reuters Kering39;s deal to acquire a 30 stake in Valentino gives the Qatari royal family a foot in the door of a much bigger luxury giant, as they consider further joint investments with the French group to expand their alliance.

Kering said on Thursday it was buying the stake for 1.7 billion euros 1.87 billion in cash from Mayhoola, the investment vehicle backed by the Qatari royals, with an option to purchase the remaining shares no later than 2028.

The deal, hot on the heels of Kering39;s acquisition of highend perfumer Creed, highlights the return of bigticket MA activity in the sector as luxury groups look to diversify sources of revenue against an uncertain economic background and slowing demand.

It also paves the way for the Qatari royals to play a higherprofile role in the 400billion euro luxury goods market, traditionally dominated by familyowned European companies.

The Valentino investment is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in the French group, Kering said late on Thursday.

Mayhoola aims to build a stake in the luxury giant by initially acquiring shares in the market, a source with knowledge of the deal said on Friday.

In five years Mayhoola could further increase its stake by selling the remaining 70 of Valentino to Kering for a mix of cash and Kering shares, the source said. Mayhoola bought the Rome haute couture house in 2012 from private equity fund…