When Geneva's Leman Capital paid an undisclosed sum to acquire upmarket French label Guy Laroche from BIC Group in December 2001, the firm appeared to be a dedicated follower of fashion. Just the previous year, it had bought Paris design company Georges Rech as a platform to create a European powerhouse of chic.
But Leman's appetite for the high life seems to be on the wane. Almost three years on, it has sold Guy Laroche to YGM Trading, a quoted Hong ([A-z]+)-based maker and retailer of clothing and accessories, for $17 million.
What is more, Leman Capital managing director Nikolaus Zens offers a sombre assessment of the firm's period of ownership. “We acquired Guy Laroche because there were hoped-for synergies with Rech, but they did not materialise,” he says.
In keeping with the reputation of Laroche itself, Leman's original bet on the company was bold and daring. Under BIC's ownership, the firm has worked its way through a succession of designers who had seemingly been unable to catch the fashion world's imagination.
The appointment of young starlet Laetitia Hecht on a five-year contract in February 2002 represented a stated effort to provide some stability as well as new ideas. One month later, and reviews of Hecht's debut collection were at best mixed. Just three seasons later, she too was escorted through the revolving door.
To a certain extent, an obsession with unearthing star designers continues under YGM's ownership with the appointment of Karl Lagerfeld protégé Herve Leroux. But there are perhaps more solid business reasons for optimism in YGM's targeting of the emerging Chinese market, where a growing and increasingly affluent middle class is demonstrating a strong appetite for Western fashion.
Meanwhile, Leman says it will now focus on its “core” Georges Rech brand under new general manager Philippe de Vilmorin, a former veteran of Rodier, Oxbow and Lee Cooper. But add-on acquisitions should not be expected in the near future.
Although Leman expressed its delight with YGM's “unexpected and impressive” offer, the firm needs something more eye-catching than the Laroche exit to re-ignite its stalled fundraising. In January 2004, the firm postponed its attempt to raise between €400 million and €500 million for BVP Europe II after achieving a first closing on €150 million in August 2002.
Zens says the firm requires more exits before re-launching the fundraising, which is unlikely to happen before next year. The firm now has a revised target of €300 million to €400 million.
€67BN WORTH OF DEALS IN EMEA
Private equity investment in Europe, the Middle East and Africa (EMEA) has grown in value by 27 percent so far this year compared with the same period in 2003, according to a report from Dealogic. The impressive deal value total ensured that, to the end of August 2004, private equity accounted for 18 percent of all M&A activity in the EMEA region, compared with 16 percent in the same period of 2003. The survey confirmed the growth of secondary buyouts, with deals of this nature worth €12.7 billion between January-August 2004, compared with €9.7 billion in the whole of 2003. Compared with the same period in 2003, secondary buyouts have increased by 148 percent in value and 91 percent by number, and now account for 18 percent of EMEA private equity activity, against ten percent last year.
GOLDMAN BUYS SOC GEN FUNDS
Goldman Sachs Vintage Funds, the private equity secondary division of Goldman Sachs Private Equity, has acquired two European buyout funds managed by SG Capital Europe, a private equity manager formerly owned by Société Générale. The two funds, managed by a team of professionals based in Paris, Munich and Milan, have invested over €300 million of equity in European companies since 1997. Goldman, which is currently raising its third fund dedicated to transactions of this kind, agreed to pay $220 million for the assets. The firm is to replace Soc Gen as the funds' sole limited partner. SG Capital Europe, which is led by senior partner Philippe Sevin, will continue to manage the investments. Goldman has also agreed to sponsor a new fund launched by SG Capital. The firm will make a $180 million cornerstone investment, in addition to which the SG team will seek to raise third party capital.
GERMANY'S FIRST PTP SOLD
Ripplewood Holdings, the international private equity firm, has acquired Honsel International Technologies, a German automotive supplier head quartered in Luxembourg, for an undisclosed price. The vendor is The Carlyle Group, which according to a spokesperson in the firm's London office stands to double its investment in the business from the sale. Gregor Böhm, a partner in the firm's Munich office, led the deal for Carlyle. The firm acquired Honsel in 1999 in a landmark transaction that marked the first private equity sponsored public tender offer ever to complete in Germany. At the time, Carlyle's investment valued the business at €162 million. Post acquisition, Carlyle went on to merge Honsel with ACT, a Canada-based metal castings business that it acquired in 2000. Today the company has seven plants in Europe and another five in Canada. Carlyle is currently in the market raising Carlyle Europe Partners II, a fund with a €2 billion target.
CLESSIDRA SIGNS SECOND DEAL
The debut fund launched by former Fininvest chief executive Claudio Sposito has joined a consortium acquiring Sirti, an Italian telecom equipment group.
Sirti is being acquired by Sistemi Tecnologici Holding (STH), a joint venture in which Clessidra and fellow private equity firm Investindustrial hold 28.5 percent stakes. Industrial equipment maker Techint and Canadian timber group Stella Jones have 20 percent stakes, and financial investor 21 Investimenti's Giada fund has a three percent interest. The deal values Sirti, which has 5,400 employees in Italy and Spain. Clessidra, which held a first closing of its debut fund on €560 million in October 2003, completed its first investment last month when acquiring Edison Gas, the owner of a 1,300 kilometre Italian gas network. Clessidra's fund is backed by a range of Italian blue-chips including Telecom Italia and Assicurazioni Generali.
COLLER TO BUY $90M DRESDNER PORTFOLIO
Dresdner Bank, the German banking group, has signed an agreement with Coller Capital to transfer 22 North American investments to the secondary investor from its Institutional Restructuring Unit (IRU). The deal is expected to complete by the end of this year. Coller is backing the management team that had been responsible for looking after the assets within Dresdner Bank. The firm has employed the same strategy before, for example when it backed the spinout of a team from Lucent to manage a portfolio of assets acquired from the tech giant in January 2002. Coller invested from its fourth fund, Coller International Partners IV, which closed in October 2002 on $2.6 billion (€2.12 billion). Dresdner's IRU unit was set up at the beginning of 2003 to dispose of non-core assets. Since then, it has reduced the non-strategic loan and private equity exposures of the bank from €35.5 billion to €13.5 billion, as of June 30, 2004. Following the Coller deal, the unit will still have private equity exposure totalling some €900 million.
FOX PAINE LINES UP BELGIAN AUTO DEAL
The San Francisco-based private equity firm has announced an exclusive agreement to acquire VCST Industrial Products, a Belgian auto components business. Terms of the transaction have not been disclosed. Once completed, the deal will be Fox Paine's second in Europe in quick succession. In May 2004, the firm teamed up with agricultural company Sygenta to acquire Advanta, formerly AstraZeneca's seed business. Fox Paine committed €161 million ($192 million) to the deal. Fox Paine, which has over $1.5 billion under management, was formed in 1997 by Saul Fox, a former general partner at Kohlberg Kravis Roberts, and Dexter Paine, a former general partner at Kohlberg & Co.