Deal in Focus: Consilium and Navigare set sail for far east

In the middle of January, Consilium made its maiden investment from its third vehicle by backing Italian menswear company Manifattura Riese, which operates under the Navigare brand. Details of the transaction were undisclosed, though unquote" understands the GP acquired the business – which has EBITDA of around €6m – for a low multiple.

Consilium is no stranger to working with companies in the clothing and accessories market. The investment is the GP's third deal in the sector in recent years. In July 2011, it acquired a majority stake in Macron, an Italian sports apparel company, from the Bormioli family for an undisclosed amount. The following year it took a 75% stake in Italian motorcycle clothing company Tucano Urbano for a reported €12m.

Navigare is an affordable casual sportswear brand, primarily distributed through third-party retail stores. Consilium was initially attracted to the company by its brand recognition and licensing business. "The company has a very flexible business model," explains Antonio Glorioso, partner at Consilium, "which combines procurement from a variety of suppliers with a state-of-the-art Bulgarian production site specialising in knitwear." Around 250 of the business's 350 employees are currently based at this site.

Off-market deal
The deal was introduced to the GP on an off-market basis by an existing contact who had been acting as a consultant to Navigare's owners, says Glorioso. Shortly afterwards, Consilium took the decision to make an all-equity investment in order to minimise exposure to external economic factors and allow more room for manoeuvre when it comes to expanding the business.

Consilium's strategy for Navigare starts with the appointment of a senior management team led by new CEO, Giuseppe Maurizio. Maurizio has extensive experience in the clothing and fashion sectors, both in his role as partner at consulting firm Bain & Company and as general manager of Miroglio Fashion. Under his leadership, the new management team will seek to reduce expenditure levels, according to Glorioso. The business will also be able to draw on the new team's track record for delivering growth within the sector.

As part of the GP's strategy, Navigare will overhaul its Italian distribution network and launch a chain of own-brand retail outlets, both domestically and internationally. The majority of these will be based in commercial centres where footfall is high. Glorioso believes this will boost Navigare's brand recognition. The company will continue with its licensing business, which had been a profitable strategy under its previous owners. Currently, Navigare has two such agreements in China. The first is a deal for 160 mono-brand stores while the second sees its underwear distributed to around 3,000 retail outlets.

Boosting exports
The launch of multiple own-brand stores will form an integral part of Navigare's plans to increase its export revenues, which today are mainly accounted for by eastern Europe. International sales make up around 13% of the company's €36m turnover. The aim is to increase this figure to more than 20%. To achieve this, Consilium has targeted the far east, where it hopes to ramp up its activity.

In addition to having very clear plans for the future growth of Navigare, the GP has also mapped out its most likely exit route from the business. Yet again, Consilium will set its sights eastward. "We have noticed there is enormous interest for attractive Italian clothing brands from industrial buyers, particularly in the far east," explains Glorioso. "If we are successful in promoting the brand and further developing the company, we believe we will see strong interest from that geography."

Advisers
Equity – Gattai, Minoli Agostinelli & Partners (Legal); KPMG (Financial due diligence); CBA (Tax).
Company – Cortellazzo & Soatto, Massimo Bertoni (Legal).

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• Topics
• Buyouts
• Consumer
• Southern Europe
• Italy
• Consilium
• Unq2015Feb