MILAN — Investcorp’s acquisition of a majority stake in Corneliani signals how the Bahrain-based group is increasing its footprint in the luxury arena. It also emphasizes a focus on men’s wear, one of the fastest growing-categories in the sector. Additionally, it’s representative of how Italian small to midsize companies are increasingly opening up to outside investment.
In addition to Valentino and Pal Zileri’s sale to Qatar-based Mayhoola for Investments, transactions include some of the top luxury-goods names in Italy, from Buccellati and Roberto Cavalli selling stakes to Clessidra; Versace’s deal with Blackstone Group, and Furla’s agreement with TIP Tamburi Investment Partners for a capital increase. Several of these deals are preparatory to initial public offerings, including the Investcorp and Corneliani partnership, and are often means to overcome succession plans and family issues.
Carlalberto Corneliani, who founded the company in 1958 with his late brother Claudio, underscored that the deal with Investcorp puts “different strategic visions” between family members to rest and did not stem from economic or financial reasons. While noting that the company’s net financial position was positive, he underscored that “the economy is very difficult and it requires a very clear and mapped out vision. There is still a lot of potential for the company. This is the best choice we could ever make, given Investcorp’s experience in developing luxury companies.” The entrepreneur, aged 85, is to retire, succeeded by Hazem Ben-Gacem, head of Investcorp’s private equity business in Europe, as chairman. “The company has been the great love of my life and we never even considered it could not survive because of a difference of opinion,” said Corneliani.
The enterprise value of the deal is calculated at $100 million. Corneliani, based in the northern town of Mantua, reported sales of more than 110 million euros, or $122.1 million at average exchange rate, in 2015. “Our commitment is to at least double that figure in five to six years,” said Ben-Gacem. He underscored there was no acquisition debt. The goal is to “become the undisputed world leaders in men’s wear.”
Ben-Gacem did not reveal the percentage of the stakes involved in the deal or the amount of capital Investcorp plans to invest. “It’s significant,” he said. Asked about a public listing, he responded: “One day in the future we hope to talk about the IPO but we need to walk before we can run.”
Several members of the Corneliani family are part of the business. The late Claudio Corneliani’s sons Corrado, who is in charge of direction, production and logistics, and Cristiano, commercial director, will stay on and remain shareholders. Corrado’s son Stefano, a former director of luxury and consumer goods at Intermonte Corporate Finance, will join the company, in charge of finance. Carlalberto Corneliani’s sons, Maurizio, director of finance, legal affairs and strategic marketing, and Sergio, creative director, will exit the firm. But the designer has agreed to stay on until a chief executive officer is appointed. Carlalberto Corneliani also held the title of ceo. “We want to bring Sergio and his team’s Italian flavor forward,” said Ben-Gacem, who underscored how he views the agreement as a “partnership” with the Corneliani family, rather than an acquisition.
With this operation, Investcorp is proving that its goal is to pool money and make investments. Investcorp, a leading provider and manager of alternative investment products, controls the Danish jewelry brand Georg Jensen and is a former owner of Gucci, Tiffany and Saks Fifth Avenue. It has typically exited its investments through public listings. The group comprises three business areas: corporate investment, real estate and global hedge funds. At the end of December last year, it had $10.7 billion in total assets under management.
The agreement was revealed in Milan on Tuesday morning and confirms a WWD report a day earlier.
“The plan is to develop the company and maintain the jobs. There is no bigger tragedy than losing one’s job,” said Carlalberto Corneliani. Ben-Gacem said Investcorp will be looking at expanding Corneliani’s production capacity in Mantua “in a few years.” The goal, he said, is to “preserve and build the Made in Italy label. It’s a responsibility we do not take lightly.”
Today Corneliani counts approximately 1,100 employees and is present in 58 countries through 10 directly operated stores, around 850 multibrand venues, about 80 franchised banners and 50 shops-in-shops. Cristiano Corneliani said the company will focus on building the North American market and has ambitious plans for the Middle and Far East.
“With our extensive experience developing family-run businesses in the luxury fashion industry, we believe that we are well-positioned to build greater brand awareness and add further value to the firm,” said Ben-Gacem. “The men’s luxury casual segment is one of the fastest-growing ones.”
Corneliani is a member of Italian luxury goods association Fondazione Altagamma.
Ben-Gacem recalled that the first investment Investcorp made in Europe four years after its foundation in 1986 was in Italy’s Riva Boats. “We have been the custodians of some of the most beautiful companies in Italy.” In addition to Gucci, Investcorp has also invested in the country’s premium safety apparel maker Dainese.