Spin-out, Raising First Fund, Takes Stake In Women’s Retailer

Sycamore Partners, the firm started by two former professionals at Golden Gate Capital that’s raising its debut fund, has taken a 9.9 percent stake in women’s clothing retailer The Talbot’s Inc. for about $21.6 million, according to a regulatory filing.

Talbots has struggled in recent years to update its stuffy image, and some investors have suggested changes in management or even a sale if things don’t improve, according to sister news service Reuters. Shares of the Hingham, Mass.-based company were trading up 10 percent at $3.80 on Aug.1, after news of the investment broke, giving it a market cap of around $267 million and valuing Sycamore’s stake at around $26.3 million.

The company set itself up with a new credit facility in early 2010 after completing a SPAC deal for a cash injection from BPW Acquisition Co. that went to overhaul marketing, among other things. In the time since the SPAC deal, Talbots shares have traded down, and well off the pace of both the Dow and S&P 500.

Stefan Kaluzny, a managing director, left San Francisco-based Golden Gate earlier this year after 10 years with the firm, reportedly bringing with him Peter Morrow, a principal.

Three sources told Buyouts the week earlier before the Talbot’s investment that Sycamore is seeking $500 million to $1.5 billion for the fund. Sycamore has lowered its proposed management fee to 2 percent from 2.5 percent, according to the sources, suggesting it’s had to make some concessions on terms to attract interest, a common theme in today’s difficult fundraising market.

Kaluzny did not return calls seeking comment.

New York-based Sycamore operates a one-page Web site describing itself as a mid-market firm whose strategy is “to partner with management teams to improve the operating profitability and strategic value of their business.” The firm is expected to target deals in the retail and consumer products sectors, which Kaluzny specializes in.

It’s unclear if Kaluzny and Morrow’s departure from Golden Gate, which reportedly was not very amicable, is impacting the fundraise. The pair told Golden Gate they were leaving only a day before they did so, according to trade newsletter Asset-Backed Alert.

Kaluzny still sits on the board of directors of some Golden Gate portfolio companies, including jewelry retailer Zale Corp. and clothing retailer Express Inc., for which he is chairman of the board. He also serves on the Yale University investment committee, according to his biography on Zale’s Web site.