Permira says ciao to Valentino

The firm has agreed the sale of fashion brand Valentino to a Qatari investment group for about €700m, as it raises its fifth buyout fund, which is targeting €6.5bn and is yet to hold a first close.

UK-headquartered buyout firm Permira has agreed the sale of Italian fasion brand Valentino to a Qatari investment group.

Mayhoola for Investments, a state-backed holding company incorporated last October in Doha, according to the Qatar companies registration register, will acquire Valentino Fashion Group (VFG), a statement said.

VFG includes the Valentino label and M Missoni licence. MCS Marlboro Classics will be carved out of VFG and will remain within Permira's portfolio as part of the “Red & Black” holding company, which also owns Hugo Boss, the statement said. Valentino had last week confirmed it was in exclusivity with a potential buyer.

The sale of VFG is understood to have fetched in the region of €700 million, according to market sources. Permira declined to comment on the sale price. Proceeds are likely to be used to pay down debt in the “Red & Black” holdco, a source said.

Perella Weinberg Partners advised Mayhoola, while Mediobanca amd UniCredit advised Permira on the sale. Citigroup advised VFG during the process.

Permira acquired Valentino Fashion Group, which included German label Hugo Boss, in 2007 in a €5.3 billion buyout. The two brands have since been more clearly delineated following a 2009 restructuring, with separate management teams and different strategies, a source said.

There is no suggestion that Permira wishes to sell Hugo Boss, whose performance has been strong, with first quarter sales rising by 10 percent and EBITDA by 13 percent to €148 million, according to an April statement from the company. The company has a market capitalisation of about €6 billion.

Valentino posted revenues of €322 million and EBITDA of €22 million in 2011.

Despite the apparent success of the Valentino process, another realisation has been pulled by the firm.

Permira decided earlier this week to pull a refinancing of consumer brand Birdseye Iglo (Iglo Group) having earlier failed to secure an offer for the business at the asking price of €2.8 billion.

The Blackstone Group and BC Partners had tabled a joint bid for the company, which sources indicated had been worth €300 million less than what Permira was prepared to accept. 

Credit Suisse and Deutsche Bank had put together a refinancing package for Iglo, but Permira took the decision to abandon the refinancing.

“Iglo Group is performing strongly and is a well-capitalised business. The momentum in the business is strong and its current capital structure gives it the flexibility to pursue both its organic growth strategy and explore further acquisition opportunities,” the firm said in a statement.

Permira acquired Iglo in 2006 using capital from its 2003-vintage Permira Europe III fund.

The firm launched fundraising for Permira V last year with a €6.5 billion target, but has yet to hold a first close. It has however realised €2.7 billion over the last 12 months through the sale of shares in Galaxy Entertainment and in TDC, together with the sales of Provimi and NDS (the latter to be completed in the near future).