Roberto Cavalli is ready to consider a sale that would value the luxury company at €450m including debt at more than 15x EBITDA

May 23, 2014 6:15 pm

Roberto Cavalli in sale talks with Investcorp

By Anne-Sylvaine Chassany in London and Rachel Sanderson in Milan

Roberto Cavalli is in talks with private equity group Investcorp about a sale of a majority stake in his eponymous Italian fashion brand as negotiations with buyout investor Permira faltered.

Advisers to the 73-year-old luxury designer, who threw a yacht party which attracted film, fashion and music industry celebrities in Cannes this week, have contacted other private equity groups in the past few weeks after failing to reach an agreement with Permira, said people with knowledge of the talks.

Mr Cavalli is ready to consider a sale that would value the luxury company at €450m including debt, two of these people said. This price would equate to more than 15 times earnings before interest, taxes, depreciation and amortisation.

Critically, the designer seems to be willing to make a decision by the end of June after lengthy negotiations with Permira did not lead to a deal. However, discussions with Investcorp are at an early stage.

Talks between Permira and Roberto Cavalli fell apart partly over governance issues, said three people with knowledge of the talks. Permira, former owner of cocktail dress designer Valentino, sought a controlling stake in the brand but Mr Cavalli did not want to meet its demands on succession planning and his involvement in management, said three people familiar with the matter.

In the past weeks, advisers to Roberto Cavalli have approached groups that had shown an interest in larger competitor Versace, which in February sold a 20 per cent stake to New York-based private equity group Blackstone.

Investcorp, the Bahrain-based firm that formerly owned Gucci, competed with the successful bidder in the final stages of the Versace deal.

The governance concerns have also put off other prospective bidders for Roberto Cavalli, including Italian private equity firm Clessidra, which last year bought jeweller Buccellati, said two people with direct knowledge of the matter.

Governance issues related to Versace also caused internal debate. Blackstone’s chief executive Stephen Schwarzman, who met Donatella Versace on at least two occasions to discuss the deal, was a supporter of the investment despite some of his firm’s dealmakers raising concerns that without a controlling stake they would have difficulties with governance and succession, said two people with direct knowledge of the matter.

A sale of Roberto Cavalli would take place amid increasing deal activity in the Italian luxury market involving private equity groups.

In November, buyout houses Carlyle and Eurazeo sold shares in Milan-based luxury ski jacket designer Moncler in a sought-after initial public offering. London-based Trilantic bought a stake in Bologna-based Elisabetta Franchi last year.

Permira, Investcorp, Roberto Cavalli and Blackstone declined to comment.

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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