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Investor Writes Down Valentino Stake Again

Permira investor says fashion firm’s value declined 35 percent in half.

MILAN — The largest investor in private equity group Permira Advisers LLP has written down its stake in Valentino Fashion Group for the second time in six months.

This story first appeared in the August 31, 2009 issue of WWD.  Subscribe Today.

London-based SVG Capital Plc said Friday the value of its investment in VFG in the six months to June 30 had declined 35 percent to 51.1 million pounds, or $76.3 million. SVG wrote down its investment in the fashion group for the 12 months to Dec. 31 by 54 percent to 78.6 million pounds, or $145.8 million.

Dollar figures were converted at average exchange rates for the periods to which they refer.

The valuation of SVG’s total portfolio declined by around 5 percent in the first half of 2009, which the company attributed to Valentino and two other investments.

“All three companies have, to varying degrees, been affected by the decline in consumer spending,” SVG stated.

In April, Valentino Fashion Group forecast an uncertain and difficult year ahead, after operating profits fell 7 percent to 248.3 million euros, or $365.3 million, in 2008. Consolidated turnover for the period rose 3 percent to 2.21 billion euros, or $3.25 billion.

The company is scaling back expansion plans to preserve cash and service 2.3 billion euros, or $3.28 billion, of debt but remains confident of its medium-term growth prospects.

Permira bought VFG in 2007 at the top of the market for an estimated 2.6 billion euros, or $3.71 billion. WWD understands that SVG took its lead from Permira in revaluing the asset, even though SVG’s valuation is likely to be more severe due to the negative effect of foreign exchange on the British pound.

On Friday, a spokesman for Permira declined to break out the fund’s own valuation of the fashion group, adding only that the value of the private equity firm’s total portfolio fell 1 percent in the first half of 2009.