Realisation of Valentino Fashion Group
Funds advised by Permira have signed a binding agreement to sell Valentino Fashion Group (”VFG”) to an investment group backed by a leading investor from Qatar (”Mayhoola”).
Through the purchase of VFG, Mayhoola will acquire Valentino S.p.A. (”Valentino”) and the M Missoni license business. MCS Marlboro Classics is being carved-out from VFG and will remain under the ownership of funds advised by Permira, which will also continue to own a majority stake in Hugo Boss, which is not part of this transaction.
The transaction values SVG Capital’s holding in VFG at approximately £59 million, a £30 million (11p per share) uplift to the 31 March 2012 valuation of the company of £29 million. Allowing for the decline in the Hugo Boss share price and negative foreign exchange movements1 since 31 March 2012, this realisation values the investment in the two businesses at approximately £295 million.
The net cash proceeds at closing will be used predominantly to repay the existing financing debt at the holding company, which owns the majority of Hugo Boss. The sale is subject to customary closing conditions and is expected to complete by October 2012.
Funds advised by Permira, in partnership with the Marzotto family, acquired control of VFG through Red & Black in 2007, as part of a wider transaction which included Hugo Boss.
Valentino is one of the world’s most exclusive fashion brands. It operates in 85 countries, with 90 direct retail stores and with over 200 single-brand wholesale boutiques. In 2011, the business posted sales of circa. €320m (+17.5% vs previous year) and EBITDA of €22m. The group also manages the M Missoni business, run under a license agreement with the Missoni family lasting until December 2018 and with a turnover of circa. €51m.
Key Investment Highlights
- A highly desirable brand, which attracted the interest of a leading family from Qatar, thanks to the introduction of a new business model and the successful re-launch achieved by the two designers Maria Grazia Chiuri and Pierpaolo Piccioli and the management team led by CEO Stefano Sassi
- A strong growth trend, with revenues up 60% over the period between 2009 and 2012E and a solid current trading, with H1 2012 up 23% vs LY and well balanced across geographies
- An attractive store concept for the retail network, with a modern, sophisticated environment and enhanced product visibility, which was launched in the Montenapolenone flagship store in Milan and will continue to be rolled out in the key flagships globally
1 Share price and exchange rate at 10 July 2012