KKR in €650m French secondary buyout

The firm reportedly beat out Carlyle, Eurazeo and Swire Pacific to acquire luxury fashion group SMCP from Paris-based L Capital and Florac.

Kohlberg Kravis Roberts, the US-based firm, has acquired high-end apparel retailer Sandro, Maje and Claudie Pierlot Group (SMCP). 

Financial details for the transaction were not disclosed, but a source close to the matters said the deal valued the company at around €650 million. 

KKR is buying the group from French firms L Capital and Florac, and will own 65 percent of SMCP after completion of the transaction. The management, which is reinvesting a significant amount of equity as part of the deal, will retain a 35 percent holding in the company. 

The acquisition is mainly paid for with equity, with debt representing nearly 40 percent of the financing package, the source close to the matter said. 

It marks the completion of an auction process started by JP Morgan and Leonardo & Company last January, when L Capital and Florac put their combined 51 percent share in the business up for sale. SMCP had attracted the attention of a number of private equity bidders, which reports said included The Carlyle Group, Eurazeo and Swire Pacific. KKR and Carlyle were poised to be the frontrunners in the contest, which finally saw KKR enter exclusive negotiations to acquire the fashion labels at the end of March.

Within the broader apparel market there is an interesting niche segment, which I would call “affordable luxury”, that has attractive growth prospects despite a low growth environment in Europe

Nicolas Gheysens

The Carlyle Group, Eurazeo and Swire Pacific could not be reached for comment before press time. 

Paris-based SMCP is a fashion retailer offering high-end apparel comprising four brands: Sandro, Sandro Men, Maje and Claudie Pierlot. Sandro and Maje were respectively founded in the late 80s and 90s, whilst Claudie Pierlot was bought in 2009. SMCP Group was then created in 2010 when L Capital, the investment arm of French luxury giant LVMH, and Florac, the buyout division of commodities group Louis Dreyfus, invested in the company. 

SMCP operates more than 570 points of sale, and generated a turnover of €350 million in 2012. It plans to open around 150 new stores in 2013. 

KKR intends to support the company’s growth by further building their profile at home and backing the company’s internationalisation. “It was a very good opportunity to grow what is already a high quality platform in international markets but also in France. We want to continue establishing these brands in Europe, the US and Asia,” Nicolas Gheysens, a director at KKR, told Private Equity International

It is not the first deal in the sector by KKR, which also owns Netherlands-based Maxeda, a retail group mostly know for its department stores in Europe, the Middle-East and North America. “We think within the broader apparel market there is an interesting niche segment which I would call “affordable luxury” which is getting a broader appeal, and has attractive growth prospects despite a low growth environment in Europe overall,” Gheysens said. 

The deal comes as the firm remains busy raising its North America Fund XI, which as at February 2013 had garnered $7.50 billion. The vehicle has a $10 billion target.