Eurazeo in €285 million Desigual deal

The deal comes after a busy year for the firm in which Eurazeo completed five investments and six exits.

Eurazeo, a Paris-listed firm, has bought a 10 percent stake in global clothing brand Desigual for €285 million.

Desigual, which was set up in 1984, has been growing through the economic downturn and saw a compound annual growth of 29 percent between 2009 and 2013, according to a statement.

“Global brands are a key investment sector for Eurazeo. As a partner, we will support [the company] in accelerating the international expansion and establishing it as a world-class brand,” Virginie Morgon, deputy chief executive officer of Eurazeo, said in the statement.

As well as supporting Desigual’s geographic expansion in Europe the roll-out of the brand will also include new product offerings, such as accessories, footwear and household goods.

In 2013, Desigual’s revenue rose by 18 percent to €828 million with digital sales generating 10 percent of revenues. By the end of 2013 it had 405 stores in 109 countries, 2,500 corners in department stores and over 11,000 multi-brand doors around the world.

The deal is the latest in a flurry of investments for Eurazeo which completed five acquisitions for approximately €200 million in 2013 and divested six businesses for a total amount of €1.1 billion, the firm said in its annual 2013 annual results this week.

It sold its entire investments in Edenred and The Flexitallic Group. It also partially sold Rexel and exited just over one-third of its investment in Moncler. Investment multiples were 2.75x over 2 years on the partial sale of Moncler and 2.1x on the sale of Rexel. It booked a 2x on the sale of Edenred and a 2.9x on the divestment of The Flexitallic Group.

Eurazeo posted a net income of €561 million in 2013, compared with a pro forma net loss of €238 million in 2012. It also saw a 31 percent in net asset value growth to €70.7 per share as of December 31, 2013.

Eurazeo typically targets investments in sectors under-pinned by growth drivers including ageing population, increased middle-class purchasing power in emerging countries, changing consumption patterns, and development of healthcare and increasing rarity of natural resources.

It has a number of different investment teams which invest at different ends of the market. Eurazeo Capital targets companies with an enterprise value of more than €200 million, while Eurazeo PME invests in small and medium-sized businesses with enterprise values of less than €200 million. It also has a growth investment arm, which focuses on innovative companies with high growth potential and typically deploys between €30 million and €50 million per deal.

For an in-depth look at the French buyout market, be sure to check out Private Equity International’s April issue, which includes our annual country report about France.