Investcorp has acquired Georg Jensen, a Scandinavian luxury brand, for $140 million, it said in a statement.
As part of the all-equity investment, the Bahrain-based firm co-invested with David Chu, who acquired a minority stake. Chu, founder of Nautica, a luxury retail business, will join Georg Jensen as a chief creative director. He also will be co-chairman of the board, together with Hazem Ben-Gacem, Investcorp’s head of European corporate investment activities.
The firm aims to further internationalise Georg Jensen in Asia, where already half of the company’s sales are coming from. The Asian market is by far the fastest growing luxury goods market today, Ben-Gacem told Private Equity International. “The number of new Chinese consumers that are going to be in the market for luxury goods, is expected to increase by 200 million by 2020,” he said.
Additionally, Investcorp aims to expand Georg Jensen’s presence in Sweden and Germany, as well as cities like Milan, Paris and London, Ben-Gacem said. “Those opinion-leading cities are very important for the brand image and the brand presentation on a worldwide basis. When Chinese tourists come to Paris, they get fascinated by what they see. When they go back they want to buy a brand that they have seen in Paris,” he added. Investcorp plans to increase Georg Jensen’s visibility in these key locations and considers opening a flagship store in Paris.
The number of new Chinese consumers that are going to be in the market for luxury goods, is expected to increase by 200 million by 2020
A lack of access to capital has hindered the company’s development in recent years, Ben-Gacem said. “This is why we want to have an all equity structure where we are ploughing the capital back into building, developing and growing the brand rather than being there to service bank debt,” he said. The firm did secure a $40 million working capital and capital expenditure facility from Nordea, a Stockholm-based bank, which it will use to expand the company.
The acquisition of Georg Jensen is Investcorp’s first investment in the luxury sector since 1994, when it acquired Ebel, a watch manufacturer. The firm, which typically invests in mid-sized companies in Europe and North America on a deal by deal basis, focuses on business services, media and education, consumer and retail and growth industrials and distribution. Between 1984 and 1987, Investcorp invested in Tiffany, the New York-based jewellery and luxury goods retailer and between 1993 and 1996, it also owned Gucci, an Italian luxury goods designer.
The firm noted that very aggressive valuations made it “relatively challenging” in recent years to acquire companies that operate in the luxury goods space. Investcorp, which describes itself as a “cautious investor”, has been outbid in recent years on a number of occasions on deals in the luxury goods sector, Ben-Gacem said. The firm acquired Georg Jensen from Axcel Capital Partners in a limited auction process run by The Rothschild Group.
It is the firm’s third private equity deal this year. In August, Investcorp acquired Esmalglass, a Spanish ceramic supplier, for approximately €200 million, from 3i Group. In March it acquired GL Education Group, a UK-based company that provides assessment products and services. Investcorp plans to do another European deal before the end of the year, the firm said.