SYDNEY – L Catterton Asia has acquired Colombia’s Maaji Swimwear to create a merger with Australia’s Seafolly, as part of a strategy to build a global beach lifestyle retail platform generating $500 million in sales within the next five years.
The Singapore-based arm of the LVMH-backed private equity firm said Tuesday it has acquired 100 percent of the Colombian brand for 50 million Australian dollars, or $38 million (1.3 times sales and 10 times earnings), with plans to create a new yet-to-be-named combined Seafolly/Maaji group that will be headquartered in Sydney.
L Catterton will control 61 percent of the new, tentatively titled Swimwear Holding Co., with Seafolly and Maaji each holding 18 percent stakes and the remaining 3 percent to be divided among senior Seafolly and Maaji executives.
According to L Catterton Asia chairman and managing partner Ravi Thakran, the two brands generated annual sales of 190 million Australian dollars, or $141 million, in 2016 – with Seafolly accounting for roughly 125 million Australian dollars of that – and earnings of 26 million Australian dollars, or $19 million at average exchange for the period.
L Catterton Asia aims to lift sales to $500 million and earnings to $60 million within five years, by opening at least 150 new global stores for Seafolly, Maaji and the Seafolly Group’s multibrand Sunburn swim wear chain, boosting wholesale stockists and expanding categories such as activewear and children’s wear.
The sales target for the Americas is $250 million of the total and Australia – where the Seafolly Group already operates 22 Seafolly stores and 22 Sunburn stores – $150 million.
“This is amazing,” said Thakran, of Australia. “One has to reflect on that – given the small population [24 million], I think Australians have a great affinity for sports and a great affinity for beach culture. They live at the beach, where the sun is shining.
“With this unparalleled combination of Seafolly and Maaji, we look to grow our portfolio and create the largest independent house of beach lifestyle brands” added Thakran.
“The two brands are market leaders from two large, but distinct beach destinations – Australia and Latin America – with each possessing a very unique style and positioning. When we invested in Seafolly, we had at that stage envisioned a roll-up strategy to aggregate a portfolio of high-quality beachwear brands in a market segment that is large, growing, but highly fragmented. Maaji was the type of unique brand that we wanted to bring on board.”
In January, Anthony Halas stepped down as Seafolly’s chief executive officer, with Philip Richards, the former general manager of LVMH watch and jewellery Australia, just appointed as Seafolly’s chief transformation officer.
Halas, the vice chairman of the Swimwear Holding Co., is working on the renaming of Sunburn, which operates 22 stores in Australia, and the launch of the first international Sunburn outlet in the U.S. within six months, said Thakran.
Seafolly and Maaji will retain separate design headquarters in Sydney and Medellin, and will respectively handle the Asia-Pacific and the Americas markets. The group will partner with other parties to look after Europe, said Thakran.
An estimated 50 to 60 percent of Seafolly’s total supply for the U.S. market is likely to move out of China to Colombia over the next two years, to benefit from the U.S.-Columbia Trade Promotion Agreement.
According to Thakran, L Catterton is looking at introducing other brands to the group and a potential initial public offering or sale exit within five years.
The announcement follows less than three months after the company was among up to 20 suitors for Billabong’s Australian swimwear brand Tigerlily, Thakran confirmed to WWD.
The timing proved awkward, said Thakran, with negotiations already well advanced with the Maaji acquisition.
In February, Billabong sold Tigerlily to Sydney-based private equity firm Crescent Capital Partners for $46 million.
Founded in 2002 by sisters Manuela and Amalia Sierra, Maaji is sold in over 54 markets and operates 12 standalone stores across the Americas and U.S. Every swimsuit is reversible and like Tigerlily, the brand has a print-heavy, bohemian edge.
Maaji’s target market is 15- to 25-year-olds and marketing initiatives include the #RealMermaids social media campaign.
Seafolly’s target market is 25- to 40-year-olds and the brand has used high-profile models such as Gigi Hadid, Miranda Kerr, Jessica Hart and Shanina Shaik for its advertising campaigns.
L Catterton acquired a 70 percent stake in the Sydney-based Seafolly Group in December 2014 for 70 million Australian dollars or $58 million at December 2014 exchange.
The group also operates a smaller swimwear line called Miléa.
Seafolly currently sells through over 2,700 doors in 41 countries, its e-commerce channel and 32 Seafolly stores in Australia, the U.S. and Singapore.
Seafolly’s seventh U.S. store is due to open in August in Westfield Century City, Los Angeles.