Permira in talks to buy back Valentino debt-sources

Private equity investor Permira is in talks to buy back some of the debt it amassed to purchase Italy’s Valentino Fashion Group two years ago, sources close to the matter said.

Permira and other shareholders of Valentino Fashion Group plan to invest up to €300m to reduce the Italian fashion house’s debt of about €2.2bn by about a third, the sources told Reuters on Friday.

The deal to buy back the debt at a steep discount to face value will close in the next couple of days and will see Citigroup exit the fashion group’s lender pool, leaving UniCredit and Mediobanca, the sources added.

A spokesman for Permira said a deal was imminent.

UniCredit and Mediobanca declined to comment.

Private equity companies have been hit hard by the financial crisis, which has left many investors nursing heavy losses and is forcing some, particularly newcomers, to reassess their allocations.

The move would underline Permira’s commitment to the fashion group and its labels Valentino, Hugo Boss and Marlboro in a difficult market environment.

US consultancy Bain & Co expects global luxury sales to fall 8% this year to €153bn as the crisis saps demand for designer clothes, jewellery and watches.