MILAN — Roberto Cavalli may have found himself an investor at last.
The designer is said to be close to signing a deal to sell 60 percent of his namesake company to VTB Capital, part of VTB Group, a major Russian investment bank, for 500 million euros, or $667.5 million. The deal values the brand at 830 million euros, or $1.1 billion at current exchange.
As of late Sunday, talks between Cavalli and VTB were still going on, according to sources. They said the designer, who has cut his vacation to return to Milan for the talks, is eager to complete a deal. One stumbling block is a governance issue and how that would impact the role of Cavalli’s wife, Eva, who helps him design the collections, the sources said.
The sale is expected to close in October.
If a deal is completed, it would end the long-running saga of Cavalli searching for an investor, which began more than five years ago with talks with private equity firm Clessidra SGR SpA. At the time, the designer was in discussions to sell a 30 percent stake in his firm, but the talks broke down over price.
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Cavalli went back on the hunt for an investor earlier this year. Private equity fund Permira was interested in acquiring the entire company but, again, talks broke down over valuation. Sources said Permira recently reentered the picture, but VTB Capital edged it out.
Bahrain-based Investcorp, a former Gucci owner, was also said to be looking at the company.
VTB Capital is relatively new to the fashion scene. One of three divisions of VTB Group, the firm is based in Moscow with offices in London; New York; Hong Kong; Dubai; Singapore; Vienna; Kiev, Ukraine, and Sofia, Bulgaria. According to its Web site, the company advised on more than 20 mergers and acquisitions transactions in Russia last year.
The sale of a majority of Cavalli to the Russian firm would be the latest in a string of acquisitions of Italian brands by foreign firms. It comes six months after the sale of a 20 percent stake in Versace to Blackstone Group for 150 million euros, or $205.8 million at then-current exchange, which valued the entire group at 750 million euros, or $1 billion. Other acquisitions of Italian brands in recent years include LVMH Moët Hennessy Louis Vuitton’s purchases of Bulgari and Loro Piana.
VTB’s investment comes as Cavalli is without a chief executive officer after the departure of Gianluca Brozzetti in January. A successor is expected to be appointed shortly, however, sources said. Brozzetti and chief operating officer Carlo Di Biagio, who left at the same time, remained minority shareholders in the firm.
Shortly thereafter, Daniele Cavalli, the son of the designer and his wife Eva, also left the company. He had designed the brand’s men’s wear collections.
In January, Cavalli reported 2013 unaudited earnings before interest, taxes, depreciation and amortization, which are expected to represent 11.2 percent of total revenues. Sales in the fiscal year ended Dec. 31 grew 9.3 percent to 201 million euros, or $265.3 million at average exchange. The company has not reported results for the first half of 2014.
Cavalli has continued to expand, however. He opened a restaurant in Ibiza several months ago and in February unveiled his global flagship on Via Montenapoleone in Milan. The 16,200-square-foot store covers five floors and carries the brand’s women’s, men’s and children’s wear and accessories as well as its home collection.
“The spaces available on Via Montenapoleone are getting fewer and fewer and prices are incredible,” Cavalli told WWD at the time of the opening. “But it’s so important to be here because Via Montenapoleone keeps growing, while in many other international cities several shopping streets are slowing down. Take Sloane Street in London, there is a lack of customers there.”
Cavalli created an exclusive women’s collection of apparel and accessories, named ‘Montenapoleone’ Limited Edition and based on the house’s iconic leopard prints, available only at the location. He also revealed at the time that he is developing another line.
“I’m creating a more casual and fun line of T-shirts and sweaters for the Roberto Cavalli label,” said the designer. “Then, I would like to add a jeans range, but I’m still waiting for another supernatural idea, I’m waiting for divine inspiration,” he said.
But the designer has always insisted that he has been unchanged by his success. At the biannual AIDS fund-raiser Convivio event in Milan in June, Cavalli was thronged by fans trying to get selfies with him.
“They still love me. I guess it’s because I am a simple person and they realize it. In the end, the word spreads that I am kind and friendly,” he said.