Shares of Sun Capital-backed Vince climb about 50 pct in debut

Vince, previously part of Apparel Holding Corp, sells items such as $300 cashmere sweaters and $1,000 leather jackets at upscale department stores including Macy’s Inc’s Bloomingdale’s chain, Barneys New York Inc, Neiman Marcus Group Inc and Saks Fifth Avenue.

It also has its own boutiques.

The company, formed in 2002, raised $200 million after its initial public offering was priced at $20 per share, slightly above the expected price range of $17-$19. The company sold all the 10 million shares in the offering.

Sun Capital’s stake in the company would drop to 68 percent if the underwriters exercise their full option.

Apparel was formed to hold the assets and liabilities of St Louis-based fashion firm Kellwood Co, which was acquired by Boca Raton, Fla.-based Sun Capital in 2008 for $955.4 million, including debt.

Apparel has not paid any dividends since 2008, according to a recent SEC filing. However, it will pay Vince’s pre-IPO stockholders about $172.2 million as part of a tax receivable agreement, the filing said.

The holding company has divested a number of divisions in recent years, including Baby Phat, Phat Farm, Lamb & Flag, Black Denim, Gerber Childrenswear and Zobha. It received about $145 million in 2008 from the sale of Hanna Andersson and Gerber Childrenswear when they were sold to a Sun affiliate, a release from that time said.

Apparel hit some rough patches, particularly during the financial crisis. Things got so bad that in 2009, peHUB reported that Sun had written down its investment in the holding company to zero. Apparel has “substantial indebtedness,” according to the SEC filing. Long-term debt stood at $386.8 million as of August 3.

Vince’s shares opened at $29.50 and rose as much as $29.97 on the New York Stock Exchange on their first day of trade. More than 4 million shares changed hands, making it one of the most heavily traded stocks on the exchange.

The company is betting on the growing demand for affordable luxury items amid signs of an economic recovery in the United States and Europe.

The luxury goods market grew at a compound annual growth rate of about 6 percent between 1996 and 2012, with estimated sales of about $260 billion in 2012, according to Bain Studies.

The global personal luxury goods market is expected to grow 4 to 5 percent in 2013, and at a 5 to 6 percent compounded annual growth rate over the next few years.

Vince counts Jones Group Inc, Fifth & Pacific Cos Inc and Perry Ellis International Inc among its rivals.

Vince operated 21 full-price retail stores and six outlet locations as of October. It also plans to open six new stores in the current financial year.

Earlier this year, Kellwood CEO Jill Granoff took over as Vince CEO from Vince co-founders Rea Laccone and Christopher LaPolice. Granoff is a former CEO of Kenneth Cole and has also served as an executive at Liz Claiborne.

Net proceeds from the offering would be used to pay down debt, the company said in the filing.

Goldman Sachs and Baird were the lead underwriters to the offering.

Avik Das and Neha Dimri are reporters for Reuters News in Bangalore

Additional reporting by peHUB senior reporter Luisa Beltran