MILAN — Versace’s talks to secure a minority shareholder are on track and industry sources point to a short list that includes the IQ Made in Italy joint venture, created last year to invest in Italian brands.
The joint venture was formed by Qatar Holding LLC, a global investment firm founded by the Qatar Investment Authority in 2006, and Italy’s Fondo Strategico Italiano, the holding company controlled by Cassa Depositi e Prestiti, or CDP, a financial company controlled by the Italian Ministry of Economy and Finance, which has a 70 percent stake. Other sources said another investment fund from Qatar as well as a separate Chinese investor could be zeroing in on taking a Versace stake. As reported, the Milan-based firm is looking at selling a 15 to 20 percent holding by the end of the year.
IQ Made has no relation to the Mayhoola for Investments fund from Qatar that owns Valentino.
“Nobody has met with [chief executive] Gian Giacomo Ferraris or the Versace family yet, so no decision has been made. Meetings are likely to be held in October to discuss more concretely,” said an industry source, who requested anonymity. Almost a year ago, Versace tapped Goldman Sachs and Banca IMI to evaluate growth opportunities.
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Armando Branchini, deputy chairman of Milan consultancy InterCorporate, said the financial advisers will help anchor “the most interesting partner, the one that is more in line” with the company’s goals. “It’s not only about the amount that will be paid. It is sure that the Versace family is seeking a long-term partner with long-term goals, not a private equity that has a five- or six-year vision,” he said.
Branchini said selling a minority stake will give Versace the resources to enter its next phase of development and open stores globally. “The choice of the means is technical, but the objective is strategic. The Versaces are not going to channel the funds to the shareholders but they will reinvest in the company,” he explained.
Branchini cited Salvatore Ferragamo and Brunello Cucinelli as similar examples of family-owned companies with a minority stake on the market. Last spring, Ferraris set a target for a possible initial public offering: when the company hits sales of 500 million to 600 million euros, or $676 million to $811.2 million at current exchange. Last year, Versace reported group revenues of 408.7 million euros, or $523.1 million at average exchange, up 20 percent compared with 2011.
Siblings Santo and Donatella Versace hold 30 and 20 percent stakes, respectively, and Donatella’s daughter, Allegra Versace Beck, owns 50 percent of the firm. Ferraris has repeatedly said that the Versace family does not wish to relinquish control of the luxury firm.
One industry source said the Versace family wants to keep control of a majority stake because there is no intention to “disengage from the company. This is not about making money but about investing in the firm, which has to compete with deep-pocketed giants in the industry, from Dior to Gucci.” Investments in marketing, retailing, collections and brands are required as the family wants to capitalize on its momentum. Also, the source said that the transaction will take place through a capital increase. “This is about a partner putting money into the company, not about Versace selling shares.”
Agreeing with Branchini, the source said the Versaces are seeking not only a partner with the financial means to support the brand’s expansion but one that speaks the same language, that understands their vision and will share it. “And they are not looking for an industrial partner such as LVMH [Moët Hennessy Louis Vuitton] or Kering,” said the source. “Money is not the only criteria, it’s not a matter of making a couple of phone calls to find who offers the most, but to find the best-suited investor.”
The process will also help value the company, the source said, adding the 15 to 20 percent stake is worth an estimated 250 million euros, or $338 million. That would value the entire company at 1.25 billion to 1.6 billion euros, or $1.7 billion to $2.16 billion.
Sources point to Ferraris as the go-to man for the task. “Donatella has said more than once that this could only be done with Ferraris, who was pivotal in the relaunch of the brand. Four years ago, this was a different company; he has done incredible work,” said the source.
Another source agreed, describing Ferraris as “an excellent, very skilled and professional manager, with great experience.” Ferraris joined the company in 2009 and, after an extensive restructuring plan, returned it to the black in 2011.