KKR doubles money on SMCP sale to Chinese trade buyer

Greg Gille
01 April 2016

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KKR has sold French clothing retail group SMCP (which operates the Sandro, Maje and Claudie Pierlot brands) to China's Shandong Ruyi Technology Group after less than three years at the helm.

Although KKR wouldn't disclose financials for the transaction, unquote" understands the GP reaped a 2x cash-on-cash multiple on the trade sale, equating to an IRR in excess of 30% over the three-year holding period.

KKR will retain a minority shareholding in the group, as will SMCP's founders and management team.

According to press reports, Shandong's offer valued SMCP at around €1.3bn, or more than 11x the group's EBITDA. The company had been in a dual-track process prior to the trade sale materialising, going as far as registering its document de base with the French financial markets authority as a first move towards a listing

Bank of America Merrill Lynch and UBS acted as financial advisors to SMCP and KKR on the sale process.

One of China's largest textile manufacturers, Shandong intends to drive SMCP's international expansion, while maintaining the brands' independence and Paris headquarters.

Previous funding
KKR supported the management buyout of SMCP in May 2013, acquiring the firm from French private equity houses L Capital and Florac. KKR bought a 65% stake in SMCP, with the management team holding the balance. Press reports at the time valued the deal at €650m.

In 2010, L Capital and Florac had acquired 51% of fashion holding Group SMCP for an undisclosed amount. The newly created holding structure regrouped fashion brands Maje, Sandro and Claudie Pierlot.

Company
SMCP was founded in 2010 at the time of the L Capital and Florac buyout. The group operates in the affordable luxury apparel segment across three brands: Sandro, Maje and Claudie Pierlot.

SMCP has roughly doubled in size over the course of KKR's three-year ownership. It now operates 1,118 points of sale (against 570 in 2013) and generated revenues of €675m in 2015, up from €350m in 2012. EBITDA totalled €107m in 2015.

People
KKR - Nicolas Gheysens, Edouard Pillot (directors).
Shandong Ruyi Group - Yafu Qiu (chair).

Advisers
Equity, company - Bank of America Merrill Lynch (M&A); UBS (M&A); Bredin Prat (legal).
Acquirer - JP Morgan (M&A); Latham & Watkins (legal).