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Moda Holding Seeks Acquisitions in Mexico

Nexxus is scouring Mexico for “financially solid and well managed” apparel and footwear brands.

Moda Holding, a fashion retail group created by Mexican buyout firm Nexxus Capital, will make acquisitions in the near to medium term as it works to create a strong enough enterprise to launch an initial public offering (IPO) by 2016.

Nexxus Capital’s vice president Alejandro Saiz said the firm has invested around 20 percent of $305 million held by its Nexxus Capital IV and V to bankroll Moda Holding.

He said the project consists of creating an integrated fashion group made up of Mexican companies that can share warehousing, distribution and office costs to achieve economies of scale.

Moda Holding launched in August 2011 and acquired fast-growing Mexican women’s footwear chain Dorothy Gaynor soon afterward. In 2012, it  bought Mexican swimwear firm Zingara. Both purchases were made for undisclosed amounts.

Saiz said Nexxus is scouring Mexico for “financially solid and well managed” apparel and footwear brands in an effort that could leave Moda Holding with five to 10 companies.

“The sky is the limit,” Saiz said, adding the firm could buy three more “high quality” companies or seven, depending on how their integration can boost Moda Holding’s bottom line.

Saiz said Nexxus hopes to float Moda Holding on the Mexican Stock Exchange in two to thee years, “once we have achieved enough mass scale.”

He added there are many interesting apparel and footwear companies in need of expansion capital as consumers’ purchasing power is rising 8 percent a year in Latin America’s second-largest economy.
If Moda Holding is listed, it would be the first IPO of a fashion retailer in Mexico.

Post-IPO, Moda Holding may consider buying fashion retailers outside Mexico, Saiz said, as it moves to become a bigger fashion group with several brands.

A source close to Moda Holding said the firm’s structure could eventually be similar to that of Inditex, the highly integrated Spanish fashion group that owns Zara and a string of other brands such as Massimo Dutti and Bershka.