Castanea Partners has taken a majority stake in Aurora Brands, the owner of Jay Strongwater and MacKenzie-Childs.
Terms of the transaction were not disclosed.
This investment marks the first for Ron Frasch, who, in February, became chief operating officer of Castanea and now will join Aurora Brands’ board. The former president and chief merchandising officer at Saks Fifth Avenue was hired to assist Brian Knez and Rob Smith, the founders of Castanea, in identifying new investment opportunities. Frasch’s focus is on the luxury space, which includes apparel, accessories, footwear and jewelry.
Castanea will partner with the Aurora Brands management team, led by Lee Feldman and Howard Cohen. As partners in Twin Lakes Capital, they led the acquisition of MacKenzie-Childs, a home furnishings and personal accessories brand, in 2008, and Jay Strongwater, a home and personal accessories brand, in 2011; they have driven significant growth in both brands.
“The principals [of Castanea] have a long history of building great brands,” said Feldman. “We’ve experienced very dramatic growth [since acquiring both brands], and we really feel there’s a lot of growth ahead of us.” He noted that, in order to reach their goals, Castanea was the right partner. He declined to reveal both brands’ current sales volume, although MacKenzie-Childs is the larger of the two.
“Howard and Lee are these amazing guys,” said Frasch. “They’re supersmart and have done a fantastic job with a beautiful brand that had been damaged. They reorganized and restrategized MacKenzie-Childs,” said Frasch. He sees his involvement on the board “as an engaged role.” He will work with both MacKenzie-Childs and Strongwater in developing a strategy for future growth and investment, including branding components and commercial strategy. “I will help them with the big decisions they have to make,” said Frasch.
He noted that, when he was doing his due diligence and visited MacKenzie-Childs’ headquarters this summer in Aurora, N.Y., he witnessed 1,000 people camping out, waiting in line for the company’s annual four-day barn sale. He was impressed by the customer loyalty for the MacKenzie-Childs products.
Steve Berg, partner at Castanea, told WWD he was attracted to “how distinctive the brands are and how loyal the customer following they both enjoy.” He said both brands are doing very well and “are growing nicely.” He saw an opportunity to expand internationally and increase the U.S. business. “We don’t want to lose what’s made them special,” he said.
Known for its picture frames, boxes, pins, ornaments, compacts, figurines and American craftsmanship, Strongwater’s products are made of pewter, enamel, metal and crystal. Strongwater is distributed in luxury department stores such as Saks Fifth Avenue and Neiman Marcus; independent retailers, and through its direct-to-consumer business. Feldman said he looks to international expansion and new product categories for Strongwater. “We’re just beginning to scratch the surface in home and personal products and have a long way to go,” he said.
MacKenzie-Childs, which makes hand-painted ceramics, dinnerware, tableware, personal accessories, home decor and glassware, has a multichannel sales presence, including direct-to-consumer business, wholesale distribution in luxury department stores and independent home retailers, and three branded retail stores. Feldman noted that MacKenzie-Childs was first acquired as a tabletop business and has evolved into a “real lifestyle business.” He noted strong business in holiday decor, kids and babies, personal accessories, jewelry and bags.
Feldman said Frasch’s involvement “will be invaluable.”
“He’s had a lot of experience growing brands, and he’s a great merchant who understands assortments,” he said.
Castanea is a private equity firm that invests between $15 million and $75 million of equity in consumer brands and marketing services companies. Its current portfolio includes Drybar, Donald J. Pliner and Ippolita. Castanea is currently investing from its third fund, a $500 million fund that targets companies with enterprise values of up to $250 million.
Financo served as the exclusive financial adviser to Aurora Brands.