Catterton Adds Cotton Ginny –

Retailer Gordon Fauteux, president and chief executive of Toronto-based Cotton Ginny Ltd., and Larry Gatien, CFO, have completed a management-led buyout of Cotton Ginny Ltd. from Florida holding company Guaranty Reassurance Corp. (GRC). The senior management team is now a minority partner with U.S. private equity firm Catterton Partners, which assisted in financing the deal.

Frank Vest, a general partner with Catterton Partners, said his firm was the sole institutional investor and took a majority stake, although he declined to specify the amount.

“[Cotton Ginny’s] management is co-investing with us, and there will be other performance-related equity opportunities, but we’re not disclosing percentages,” he said.

Cotton Ginny was founded in 1979, opening the first location on Bellair Avenue in Toronto. At that time, cotton specialty stores did not exist, and active wear was just becoming a factor in the fashion industry, according to the company. Cotton Ginny identified this natural fabric, active-wear niche. The retailer expanded across Canada, and in August 1989 initiated a new division called Cotton Ginny Plus. Overall sales last year were over $200 million. The company employs 3,000 people.

“This investment deal gives Cotton Ginny a consistent, secure foundation from which to build on the results we have seen from our divisions in the past several years,” said Fauteux in a statement.

Connecticut-based Catterton Partners focuses on providing growth equity, industry expertise and value-added contacts to consumer products and services companies.

“Our firm is the largest firm focused on consumer products, brand, retail, wholesale and distribution,” Vest said.

“We look for recognized brand names. Cotton Ginny has 280 stores and it does its own design, production and sourcing. They have customer loyalty. The company also had enough scale, and a strong management team with long experience and high repeat rates,” he added.

More generally, Vest called Canada a natural extension of the U.S.

“Seventy-five percent of the Canadian population lives on the border with the U.S. It’s not a truly foreign population. Many of the same drivers exist there that exist here. [And] retailing is stronger there right now. There are a number of American retailers going there,” he added, such as Gap, with Old Navy, and American Eagle.”