Proenza Schouler’s new investor knows its way around a tough situation.
Sources said the designer company’s new mystery backer is Mudrick Capital Management, a New York firm that specializes in distressed investments.
Mudrick is led by founder, president and chief investment officer Jason Mudrick, who does not appear to have previously invested in the fashion industry, but has certainly made his mark on Wall Street.
He started the company in 2009 with a kitty of $5 million and as of last month was managing $2.2 billion, mostly for institutional clients. Mudrick started his career as an associate in Merrill Lynch’s investment banking group before joining Contrarian Capital, where he focused on distressed investing, buying debt that would be restructured into equity and investing in post-bankruptcy equities.
According to the bio on his web site, he also spent two years during graduate school teaching economics classes to Harvard University undergraduates.
Now, he’s set to get first a firsthand lesson in fashion.
Proenza Schouler’s founders, designers Jack McCollough and Lazaro Hernandez, play the fashion game at the highest levels — having won CFDA Fashion Award for Womenswear Designer of the Year three times. But have not been able to get their business in gear.
The deal with Mudrick this week bought out the firm’s former outside investors — Castanea Partners and a group led by financiers John Howard and Andrew Rosen — and also gave the company a cash injection.
Under the new set up, the designers are said to be generally in the driver’s seat and free to “determine the future,” according to one source familiar with the deal.
“Jack and Lazaro will benefit immediately from any future sale or monetization,” the source said. “They are true partners with Mudrick.”
The exact ownership structure is said to be based not on a set percentage, but is instead tied to performance. So presumably, the designers will find themselves with a larger piece of the pie if the business develops well.
Neither Proenza Schouler nor Mudrick returned queries from WWD on Tuesday.
In general, the investor shake-up is seen as a fresh start for a company that’s always been seen as heavy on potential.
“This is an exciting time for the brand,” said investment banker William Susman, who is a managing director at Threadstone and advised Proenza on the deal. “To have Jack and Lazaro back in control of their company from an ownership position will allow the brand to once again lead the way in contemporary luxury fashion.”