NEW YORK — With the acquisition of the Neiman Marcus Group by Texas Pacific Group and Warburg Pincus, the spotlight again shifts to the financial players, their motives and plans for their retail and fashion acquisitions.
Of the two, Texas Pacific is the one with some experience in retail and apparel. The deal for Neiman Marcus appears to be the first foray into retail and apparel for Warburg Pincus.
The Texas Pacific Group is better known for rescuing brands that have fallen on hard times — J. Crew, Bally’s, Burger King, Ducati, Del Monte Foods Co. — than for investing in well-run companies. However, luxury goods remain an area in which TPG has held investment stakes from time to time. It also holds an investment stake in U.K. retailer Debenhams.
Founded in 1992 by David Bonderman, James Coulter and William Price, TPG has more than $15 billion of committed capital under management. The firm first gained fame in 1993 with its investment in bankrupt Continental Airlines, helping the air carrier emerge from bankruptcy.
As for its retail and apparel investments, TPG currently owns about 60 percent of J. Crew, with the balance of ownership held by Emily Cinader Woods, daughter of founder Arthur Cinader. TPG in 1999 bought Bally Management from Oelikon-Buhrle. Bally is primarily a footwear brand, with product extensions in accessories and apparel.
TPG typically does not participate in the day-to-day operations of the companies that the firm invests in, preferring the role of board member working with management to build the company.
Part of its investment strategy is to hold positions on a mid- to long-term time horizon.
Warburg Pincus began as an investment banking and private investment counseling company under the name E.M. Warburg & Co. Inc. in 1939 by the late Eric Warburg. The business merged in 1966 with venture capital and investment firm Lionel I. Pincus & Co. John Vogelstein joined the combined firm a year later, after which the company’s focus turned to private equity investments.
The firm changed its name to E.M. Warburg Pincus & Co. in 1971, but it wouldn’t be until 1983 that it closed on its first international investment. Warburg Pincus has sponsored 10 private equity investment funds since 1971, and currently has about $13 billion under management. Over the years, the funds have invested more than $18 billion in approximately 490 companies in 30 countries. Warburg’s focus has been primarily in information and communication technologies, financial services, health care, media and business services and real estate.
As for its exit strategy on many of its investments, Warburg Pincus has been the lead investor in 65 companies that have completed initial public offerings since 1990. And in the past two years alone, Warburg’s portfolio of companies have completed more than 100 IPOs, public debt offerings and other capital markets transactions.