WWD.com/business-news/financial/eurazeo-takes-stake-in-desigual-7600391/
government-trade
government-trade

Eurazeo Takes Stake in Desigual

The investment firm's 10 percent share values the Spanish fashion chain at more than $3.7 billion.

Models on the runway at Desigual's spring 2014 show.

PARIS — First puffer jackets and now patchwork coats and dresses, too.

This story first appeared in the March 19, 2014 issue of WWD.  Subscribe Today.

Paris-based investment firm Eurazeo SA is emerging as a bigger and more active player on the fashion scene, disclosing on Tuesday that it would invest 285 million euros, or $396.4 million at current exchange, in Spanish fashion chain Desigual in exchange for 10 percent of its share capital.

The transaction gives the Barcelona-based company an enterprise value of 2.7 billion euros, or $3.72 billion, and follows Eurazeo’s first big foray into the sector with its 2011 purchase of a 45 percent stake in Italian firm Moncler, which went public last December.

Eurazeo said its latest transaction would help Desigual speed up its rollout of stores in Europe, the U.S., Latin America and Japan.

RELATED CONTENT: Desigual RTW Fall 2014 >>

“We’re going to help them expand internationally,” Frans Tieleman, managing director of Eurazeo, told WWD. “They stand for fun, for love, for color. They have a really unique positioning and at an affordable level.”

He noted that France has already become as important as Desigual’s home market of Spain, and Italy, Germany and the Benelux countries possess similar potential.

The brand, known for its wildly colorful and patterned apparel and irreverent image, is strongest in women’s wear and accessories, Tieleman noted, citing footwear, children’s wear and household goods among key growth avenues.

Eurazeo said it would support founder Thomas Meyer and his teams. Proceeds from the capital increase are earmarked for building a state-of-the-art distribution hub to support its global advance.

Desigual entered the U.S. in 2009 and now shows its seasonal collections on the runway during New York Fashion Week.

Eurazeo trumpeted that Desigual has seen its revenues increase tenfold since 2007.

Revenues at Desigual rose 18 percent last year to reach 828 million euros, or $1.1 billion at average exchange, with an earnings before interest, taxes, depreciation and amortization margin of 29 percent.

As of Dec. 31, Desigual operated 405 stores in 19 countries. It also distributes its collections via 2,500 corners in department stores and some 11,000 multibrand doors, according to Eurazeo.

“Eurazeo sees the potential of the brand as a global force,” Borja Castresana, Desigual’s chief marketing officer, said in an interview. “The partnership brings new experience, new geographies and geographical knowledge; it means more consolidated product lines and a dialogue between the two companies to establish our position.”

Eurazeo’s portfolio spans some 5 billion euros, or $6.88 billion at current exchange, in assets and the firm has investments in hotel operator Accor, real estate player Foncia, rental firm Europcar and energy specialist Rexel.

According to market sources, Eurazeo has also had its eye on Carven, a fast-growing French fashion house helmed by buzzy designer Guillaume Henry.