Aslaug Magnusdottir, Partner, TSM Capital
1. TSM Capital, an LBO shop formed by former Bloomingdales CEO Marvin Traub, is not raising a buyout fund, but it does plans to find money to invest in up-and-coming apparel, accessory and jewelry retailers on a deal-by-deal basis. Why go the fundless route?
Our longer-term goal is to raise a fund, but we were in a position where we actually had a pipeline of deals and realized it would take quite a while to put together a fund. We had these deals we wanted to do, and we had investors that were willing to back several of them. So we decided, “Let’s get started and build a track record as a team, and then soon after making our first few investments let’s raise a fund.”
2. How would you describe TSM Capital’s investment philosophy?
We take protected minority stakes or majority stakes in situations where we can be very actively involved and add a lot of value. We would obviously always have a board seat, but we would really be much more active than a typical board member. We’ll do things like help them set up licensing arrangements and franchising arrangements, as well as help them look at spots for retail stores and set up their retail operations starting in a new market. We will help introduce them to wholesale accounts that might be interested in carrying their product.
3. Your business partner Marvin Traub has said very few professional investors focus on early-stage luxury businesses. Why do you think that is?
Most of the groups that do look at the sector are looking at larger investments just because of the restrictions their fund sizes place on them. In terms of the early-stage investments, I think there’s a fear of what you’d call a fashion risk. To make investments in this sector you really have to have an eye for what can work. And I think very few investors that haven’t had extensive experience within the industry would feel comfortable to make those kinds of decisions. So they look for much more long-term proof of the concept working.
4. TSM Capital’s first deal was to make a minority investment last month in Matthew Williamson Holdings Ltd., a British fashion house. Why did you choose that company?
Matthew Williamson is a brand that ticks all the boxes in terms of what we’re looking for in an early-stage business. The company has a very distinctive brand that’s different from a lot of the other things in the ready-to-wear market. The company has great recognition within the industry and fashion press and a lot of celebrity endorsement. The brand has global potential and the company is already selling to 160 accounts around the world. It’s strong in Europe, the Middle East, Russia and has a solid business in the United States. The company also has managed its finances very well. They’ve been profitable from the first year, which is very unusual for a fashion brand, particularly a high-end fashion brand.
5. Yours is one of the few, if not the only, buyout firm with a fashion advisor. What is TSM Capital’s policy on wearing white after Labor Day?
I love white in the winter, in particular in coats and accessories. But I think it all depends on the style of the season and the person wearing it. Different people can get away with different things.
Edited for clarity