PARIS — Birimian, an investment company focused on African fashion designers, is scaling up its platform by partnering with Paris-based private equity firm Trail Capital to launch a long-term investment company aimed at fostering the continent’s first generation of global luxury brands.
Trail, which holds stakes in companies including creative consulting firm Mazarine, professional beauty brand Wella and contemporary jewelry label APM Monaco, has invested an undisclosed sum in Birimian’s dedicated investment vehicle.
In a second phase, the two companies will raise funds with the aim of infusing 5 million euros a year over the next five years in a portfolio of emerging and established heritage brands throughout the continent.
“We have created an investment company that plans to have a portfolio of 20 to 30 brands within five to seven years,” Laureen Kouassi-Olsson, founder and executive chair of Birimian Holdings, told WWD.
Some of the first beneficiaries will be selected from the 10 brands participating in Birimian’s accelerator with French fashion school Institut Français de la Mode, launched last year. Those candidates include South African designers Rich Mnisi and Mmuso Maxwell, who have both caught Beyoncé’s eye.
Others will be chosen among brands that are already showing and selling their collections overseas. In recent years, the LVMH Prize for Young Designers has cast a spotlight on African labels including Thebe Magugu, winner of the 2019 edition; Kenneth Ize; Lagos Space Programme, and Tokyo James.
“With Trail, Birimian has found an institutional investor that will help it achieve its mission to scale-up the multibillion-dollar African fashion industry and to become a leader in this field. Trail will support Birimian in its value creation strategy, leveraging its extensive network of partners, advisers and key stakeholders,” the companies said Monday in a joint statement.
Xavier Marin, founder and managing partner of Trail Capital, said it saw great potential for the development of African brands. The firm, which has more than 850 million euros cumulated capital managed to date, has previously focused on helping small and mid-size European companies scale up in size and scope, with a specific emphasis on frontier markets.
“We’re convinced that in the next 10 years we will see the development of major African heritage brands equivalent to brands of French, Italian, British and American origin,” he said. “We want to be the catalyst to help these designers and entrepreneurs to develop.”
Wary of the challenges facing investors in Africa’s fragile fashion ecosystem, the platform aims to establish a new investment model distinct from traditional private equity funds, which typically hold stakes for a limited time before flipping them.
“We’re increasingly positioning ourselves as an operational partner,” Marin said. “And with Birimian, we’re going to bring designers much more than capital. We will bring them know-how in terms of production, distribution, digital development and communication. What we’re jointly offering is really this whole toolbox.”
Kouassi-Olsson said the partnership would pioneer a new patient investment model in the hopes of succeeding where previous efforts have failed. “Resources for African brands are practically nonexistent. African investors today still don’t believe in the opportunity of fashion and design in Africa. It’s much too far-removed from the types of investments they’re familiar with,” she noted.
“We’re offering a different type of return on investment based not on the sale of individual stakes, but on the creation of goodwill and a strong brand that generates synergies and added value through an industrial and portfolio approach,” she said, noting this will benefit designers, investors and textile manufacturers alike.
“We believe that when investors exit the company, they will recoup at least three to four times their initial investment, because for us, the value of the whole will be greater than the sum of investments in this portfolio,” Kouassi-Olsson added.
But she cautioned that African fashion brands must be handled differently from their more mature counterparts. Only 10 percent have revenues exceeding 500,000 euros a year, and just 0.5 percent make more than 1 million euros, she revealed.
With that in mind, Birimian’s first order of business was to run due diligence on the first intake of brands in its accelerator program, which benefited from a financial audit by accounting firm EY. In addition to Mnisi and Maxwell, the participating labels are Christie Brown; Kente Gentlemen; Loza Maléombho; Mille Collines; Post Imperial; Shekudo; This Is Us, and Umòja.
“Some brands were in big trouble because they had unsustainable levels of debt, and we ended up renegotiating this debt for them with their bank,” Kouassi-Olsson said. Aided by a panel of experts, Birimian helped the brands identify levers for growth and then introduced them to buyers during Paris Fashion Week, via a partnership with WSN, the organizer of trade show Première Classe.
During the investment phase, the platform will assist designers with issues such as financial planning, production, collection supervision and working capital management. For instance, Birimian can provide brands with enterprise resource planning software like Zedonk, which they wouldn’t be able to afford on their own, or negotiate group rates with manufacturers.
“The problems begin for designers when they’re in the limelight and they start to be successful, because as soon as they reach that stage, scaling the business is literally impossible,” said Kouassi-Olsson, saying that African brands have to be open to outsourcing some of their manufacturing overseas.
The initiative should also free up African designers to work at traditional luxury houses, a proposition that has been challenging until now.
“When you have your production chain and activities in Africa and you join a major house as artistic director, you can’t be shuttling between the two all the time, so that creates a dilemma for these brands,” she said. “We can be a complementary solution by financing brands, supporting the designer, reinforcing capacities, to make sure they can have that international visibility that also benefits their brands.”
It’s not the first time investors have announced plans to accelerate Africa’s fashion industry. In 2018, Ghanaian entrepreneur Roberta Annan launched the Impact Fund for Africa, a 100-million-euro investment fund supporting African creatives working in fashion and lifestyle, in partnership with the Ethical Fashion Initiative, or EFI. Little has been heard about the initiative since.
Subsequently, the EFI — a flagship initiative of the International Trade Centre, a Geneva-based joint agency of the U.N. and World Trade Organization — returned to Paris Fashion Week with a showcase for African designers, which it hopes to transform into a blended finance facility to mobilize investment from inside the African continent, but also from Europe.
And in a further sign of the growing traction of African and diasporic brands, The Folklore Group last week secured $1.7 million in pre-seed funding. Originally launched as e-commerce site The Folklore in 2018, the platform founded by Amira Rasool is now expanding into a conglomerate with business-to-business, consumer and media offerings.
Trail’s investment represents a vote of confidence in Birimian, just one year after its launch. Kouassi-Olsson has leveraged her expertise in private equity to develop what she described as an innovative model. Their joint platform will reinvest in some brands, shed underperforming ones and will hold stakes for up to seven years.
“The fact that there were announcements that didn’t necessarily materialize in the past made it difficult for us to convince investors,” she conceded. “We think our ambitions are reasonable.”
The partnership will give Trail, which has a strong track record in Asia, a foothold on the African continent. “We believe there is a strong interest from consumers who have a more inclusive and values-driven approach and who are sensitive to the rich heritage of these brands,” Marin said.
As part of the partnership, Birimian will open a representation in Paris to oversee a portion of its activities, located in Trail’s offices.
“I’ll be satisfied with what Birimian is doing if in 2023 we have a portfolio of around 15 brands, and out of those 15 brands, there are at least five with international distribution that are visible, do runway shows and are critically acclaimed, and among the 10 others, we’ve identified the next five that can achieve that,” Kouassi-Olsson said.