ANOTHER DEEP POCKET: BULGARI SETS UP FUND TO ACQUIRE LUXE FIRMS

Byline: Samantha Conti

MILAN — Luxury jeweler Bulgari has unveiled plans for a closed-end investment fund with a simple philosophy: la dolce vita.
The new fund, Opera SA, will target medium-size Italian companies in the fashion, interior design, tourism, retail and food sectors.
Based in Luxembourg, Opera will act both as a closed-end fund and strategic investment company, helping the names in its stable to develop their brands and their marketing and commercial strategies. Opera also aims to give companies a more global approach to business.
“There are so many extremely interesting companies with potential out there, but they don’t have the resources to grow,” said Francesco Trapani, Bulgari’s chief executive officer. “We feel we can give them the money and the strategic know-how to do just that.”
Trapani, who created the fund with Renato Preti, a former director at Morgan Grenfell Private Equity, said the aim is to invest in three to four companies a year, and build a stable of 12 companies in the medium term. Trapani said he was already screening potential candidates, and that the first investment would be completed by the end of this year. He declined to name any acquisition targets.
Preti said Opera is looking to invest in companies with a turnover of $23 million to $235 million and strong potential. “We will be able to provide them with the oxygen they need: management support, a strategic vision, and help with brand development, distribution and international growth.”
Over the next six months, the team will be raising money for the fund, and Preti said the minimum investment is approximately $2 million. Bulgari has already invested $23.4 million, and the two partners plan to raise a further $140 million to $190 million from outside investors.
Bulgari also has 50 percent control of the management company that will run Opera and decide its investment strategy. Outside investors will hold the remaining 50 percent of the management company.
In recent years, a growing number of luxury players have adopted a multi-brand approach, most notably Gucci Group NV, which took major steps to build its own group last year with its acquisition of Yves Saint Laurent and its parent Sanofi Beaute as well as Sergio Rossi.
Also, Pegasus Capital Advisors, which operates private equity funds valued at over $800 million, is in the midst of establishing an American fashion conglomerate. The Pegasus Apparel Group has already acquired majority stakes in Daryl K, Miguel Adrover and Pamela Dennis and has said it plans to acquire eight to 10 companies over the next two years.
However, Preti said Opera’s goal is to make money, not just stockpile labels. The idea is to invest in companies with potential, build them up and then sell them off or list them on the stock exchange.
Trapani said he could sympathize with companies itching to expand. “Just a few years ago, Bulgari was a medium-size company, and we weren’t at all global,” he said. “And I think we’ve done a great job in transforming ourselves.”
Over the past five years Bulgari has turned from a high-end jeweler into a multibrand luxury goods company selling fragrances, accessories and eyewear.
When Bulgari wanted to launch a fragrance line, it took the unusual step of founding its own fragrance firm in Switzerland. Today, that company produces and distributes fragrances for Bulgari, Ferragamo and Ungaro. In 1995, Bulgari was one of Italy’s first luxury goods companies to go public.
Trapani stressed that Bulgari would continue with its own growth and investment strategy. In 1999, the company reported consolidated sales of $440 million.