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Caruso Takes Investor to Enter Chinese Market

Deal with an investment fund managed by Fosun Intl. will allow the Italian men's wear firm to open flagship stores in key locations globally, including China.

MILAN — Caruso is entering the second phase of its expansion, with plans to open flagships in key locations globally and to enter the Chinese market. To this end, an investment fund managed by Fosun International Ltd. has taken a 35 percent stake in the high-end Italian men’s wear label. This is the Chinese group’s first investment in the luxury industry in Europe. Financial details of the partnership, which will be completed by the end of September, were not disclosed.

This story first appeared in the September 12, 2013 issue of WWD.  Subscribe Today.

“This is a financial operation with a partner that is very respected and powerful in China,” said Umberto Angeloni, chairman, chief executive officer and majority shareholder of Raffaele Caruso SpA, which was delisted earlier this year. “Fosun has a financial strategy but can also provide invaluable synergies that will facilitate the brand’s entry in the Chinese market and accelerate its growth, without interfering with management. We are not present in China and it’s too easy to go wrong there, but with such a partner we can enter the market right from the top.”

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Angeloni said he was not seeking “an alliance with a luxury group,” nor was he interested in selling a stake to a private equity fund, which generally has a short-term view.

“Our goal is to position Caruso among the [top] five men’s wear brands in the world in five years,” he said.

The label’s first flagship is expected to open in Milan next year, likely followed by units in Shanghai and New York.

Guo Guangchang, founder and chairman of the Hong Kong-listed Fosun, said the group, which comprises diversified businesses ranging from insurance and steel to pharmaceuticals and holds investments in Club Med and St. John Knits, is “interested in investments linked to the secular trend of manufacturing and consumption upgrade in China.”

In a phone interview, Patrick Zhong, Fosun’s head of global investments, said that men’s wear is a very important area of growth in China, “one that is dominated by very few brands, which are often not contemporary enough, stale and with decreasing quality.” Consumers in China are increasingly discriminating and appreciative of quality and value for money. “They seek the best [and have] the financial means to afford it. Caruso is a fabulous brand with a Made in Italy heritage, with great craftsmanship, and Umberto is a great entrepreneur with a great track record. He understands men’s wear and is passionate about it, about delivering the right product to consumers in an honest way and I applaud that.”

There are no plans for a major rollout of stores, bur rather for a sophisticated marketing strategy through word-of-mouth communication. “We will introduce the brand to opinion leaders, to the most successful people in the country to create a loyal customer base with a long-term horizon,” said Zhong.

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Last year, the Soragna, Italy-based Raffaele Caruso reported sales of 64.4 million euros, or $82.4 million at average exchange. The Caruso brand, which is available at 300 points of sale globally, including 100 in Italy, accounted for 25 percent of revenues. In addition to the namesake label, the company manufactures for a large number of high-end brands, including Dior and Lanvin.

Zhong said Fosun is interested in other brands beyond Caruso as well. “We will want to help with other brands in the future,” he said. Fosun surfaced as a potential investor in Versace at the end of last month, but Zhong declined to comment on the speculation.