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Private Equity Players Eye Cavalli

Private equity funds, increasingly active in the fashion and luxury sector, appear to be circling around Roberto Cavalli.

PARIS — Private equity funds, increasingly active in the fashion and luxury sector, appear to be circling around Roberto Cavalli.

Officials at Cavalli declined to comment for this story, so the likelihood of a transaction could not be learned. But a source close to the designer said Cavalli has been disappointed with the valuations of several offers he’s received and believes his company is worth upward of 1 billion euros, or $1.25 billion at current exchange. He is said to favor minority investments or is possibly seeking a public offering in a few years.

One of the companies eyeing Cavalli, WWD has learned, is SAB Capital, a new fund established by Sheikh Salah Al-Belawi. SAB has submitted a bid for 60 percent of Cavalli. According to market sources, SAB’s bid is a friendly one, and the principals have good relations with the designer and his wife, Eva, who jointly control the company.

SAB, based in Saudi Arabia, intends to make multiple investments in fashion and luxury goods and currently is looking at two other European firms, the sources said.

Recent months have seen several headline deals involving private equity players, including Change Capital Partners buying Jil Sander, Sun Capital Partners Inc. taking on Stila Cosmetics and Sciens Capital Management LLC and Plainfield Asset Management LLC teaming up for Asprey.

Roberto Cavalli SpA’s 2004 balance sheet, the most recent available, shows the firm posted a net profit of 1.4 million euros, or $1.7 million at average rates for the period, on sales of 97.7 million euros, or $121.1 million. But the designer also has a host of lucrative licensing deals, including one for his diffusion brand, Just Cavalli, via a separate company called Iga Finance BV, based in the Netherlands.