PARIS — An entrepreneurial spirit, plenty of capital, connections galore and a real sense of urgency.
Those are among the virtues ascribed to private equity funds, which are emerging as key players in fashion and luxury as they continue to snap up brands in the current buoyant acquisitions climate.
Investment executives say brands moldering within conglomerates or cash-starved independents can get a new lease on life under more driven and flexible owners — even as detractors warn there are few quick fixes in fashion.
"One of the key features of private equity is they're able to apply focus and professional management to their investments," said Pierre Mallevays, managing director of Savigny Partners LLP, a corporate finance and mergers and acquisitions firm in London. "If you have a large group, there will often be isolated assets that get less attention from senior management."
"For any brand that needs to be revitalized, new ownership helps," agreed William Smith, managing partner of Global Reach Capital, a fund that has invested in fashion house Tory Burch and has signed letters of intent to acquire two other "big well-known" brands. "The private equity guys are very sophisticated. They hook up with new operators and merchants. We're very focused and we can add value from sourcing and brand building."
To that end, Smith works in collaboration with luxury consultant Robert Burke, who offers his retail and merchandising expertise.
"Our point of view is that we want to buy businesses and build them up, and we have the resources to get there. We have a history of being retail operators on an international scale," said Gunnar Sigurdsson, managing director of U.K. investments for Icelandic investment firm Baugur Group, which owns a range of British fashion chains, from Karen Millen to Whistles.
"Depending on the brand, the growth potential can be quite significant," said Sigurdsson, citing Baugur's Jane Norman young women's chain as an example, which posted double-digit like-for-like sales last year.
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. (For more on Asprey, see pages 10 and 11.) Then, of course, there was last year's $5 billion acquisition of Neiman Marcus Group by private equity players led by Texas Pacific Group.
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