Fashion in vogue for private equity

Earlier this week, Permira acquired a 29.9% stake in Valentino, the Italian fashion house famed for its celebrity clientele, including Jackie Kennedy, Sophia Loren and more recently Kate Winslett.

According to reports this week, Carlyle was also in Milan to meet with the Marzotto family, which was looking to sell a portion of its 50% controlling stake in the fashion chain, which also houses the Missoni and Marlboro Classics labels and has a controlling stake in Hugo Boss.

Permira’s purchase, which values the group at approximately €2.6bn (US$3.5bn), is believed to be the largest purchase for a luxury brand by a private equity firm. It is not the first, however. Fashion has been a la mode with financial buyers for some time.

This week has also seen Advent International announce the acquisition of Takko from Permira for €770m. Permira acquired the German fashion discount chain for €603.5m in 2000.

The acquisition has been made in partnership with Takko’s management team led by its managing director, Arnold Mattschull.

In February this year, New York and London-based private equity firm Towerbrook Capital Partners paid £185m for luxury shoe brand Jimmy Choo in a tertiary buyout from Lion Capital.

The owner of 60 branded stores, founded by president Tamara Mellon and chief executive Robert Bensoussan, had already been under private equity management for six years: Phoenix Equity Partners paid £9m for a 51% stake in 2001 and made more than four times its money when it sold on the business to Lion Capital in November 2004 in a transaction valuing it at £101m.

The previous February, Italian fashion house Prada sold German-based subsidiary Jil Sander to Change Capital Partners, the private equity firm headed by former Marks and Spencer chairman Luc Vandevelde, for an undisclosed sum.

The London-based private equity firm also has investments in fashion labels including Danish leisurewear business Buksesnedkeren and UK retail chain Republic, bought from 3i for £105m in October 2005.

In France, AXA Private Equity sold its interest in Modamax, the holding company of fashion chain Camaieu. European buyout firm Cinven is understood to have paid about €1bn for the 65% stake.

Global private equity firm Apax Partners already has interests in the fashion world, having purchased Tommy Hilfiger for US$1.6bn in late 2005.

According to a source, the firm has also recently investigated purchasing a stake in German sportswear brand Adidas, although no official confirmation of an approach has been made. Apax already owns US footwear brand Reebok.

Also in the sports brand market, new Italian distressed fund Orlando Italy bought ailing Italian brand Sergio Tacchini for an undisclosed amount in February this year.

Apax’s other major retail interest is shared with Permira. Both firms are understood to have tasked Merrill Lynch with running an auction process for UK chain New Look, which is expected to begin next week.

Permira’s other fashion retail interests include Spanish clothing retailer Grupo Cortefiel, acquired alongside CVC Capital Partners and PAI Partners for €1.44bn in 2005; and Vogele Group, a Swiss clothing retailer acquired for €563m in 1997.