Blackstone exits Versace to trade in €1.83bn deal

Francesca Veronesi
25 September 2018

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Blackstone has sold its 20% stake in the Milan-headquartered fashion brand Versace to New York Stock Exchange-listed fashion conglomerate Michael Kors, which will rebrand as Capri Holdings.

The Versace family, currently owner of 80% of the business, will retain a minority stake, while Blackstone will fully exit the investment, according to Italian newspaper Il Corriere della Sera.

Blackstone generated a capital gain of €156m from the investment, a source familiar with the situation told Unquote.

The investment is an exit for the $15bn Blackstone Capital Partners VI fund, closed in 2009, and the $5.6bn Blackstone Tactical Opportunities Fund I vehicle, closed in March 2014, Unquote understands.

Versace originally considered listing, but the market conditions have not been suitable for the operation, according to Corriere.

The transaction is not subject to a financing condition. The cash portion of the purchase price is expected to be funded by a combination of cash on hand, drawings under the company's existing revolving credit facility, and committed underwritten bank term loans from JP Morgan Chase and Barclays.

The completion of the Versace acquisition will see Michael Kors Holding rebrand as Capri Holdings, which will operate the Michael Kors, Jimmy Choo and Versace brands. Owners of Versace, Donatella, Santo and Allegra Versace will become shareholders in Capri.

Designer Michael Kors founded his eponymous fashion house in 1981. The business is today specialised in luxury accessories and ready-to-wear fashion. As of 31 March 2018, Michael Kors generated revenues of $4.71bn. In July 2017 the fashion conglomerate Michael Kors bought UK-based high fashion house Jimmy Choo, specialising in shoes, handbags amd accessories, in a £896m deal.

Versace is the second iconic Italian fashion house to experience a change of hands in the past few months; Italian investor FSI acquired a 41.2% stake in Missoni from the company's founders in July. The acquisition was made via a capital increase, in an all-equity deal that saw FSI investing some €70m. The Missoni family retained the remaining stake.

Previous funding
The GP bought a 20% stake in Versace in 2014, making a €150m equity commitment and acquiring €60m in stock. The deal gave the firm an enterprise value of €1bn.

At the time of the investment, Unquote reported that the GP beat rival interest for the asset from Fondo Strategico Italiano, Ardian, Permira, Clessidra and Bahrain-based Investcorp – the latter is understood to have come close to winning the asset. Versace was planning to use the fresh funding to invest in its retail network in existing and emerging markets, and develop its portfolio of brands, with particular attention to Versus Versace, its e-commerce business.

Company
Founded in 1978 and headquartered in Milan, Versace is a luxury fashion brand established by Gianni Versace. The firm designs, markets and sells luxury clothing, accessories, makeup and home furnishings across the various brands in the Versace group.

Versace generated revenues of around €680m in 2017 according to the Financial Times.

Versace disclosed it plans to grow the busines to reach $2bn in revenues globally. It also intends to diversify its geographical portfolio from 66% Americas to 57%, from 23% Europe to 24% and from 11% Asia to 19%.

People
Blackstone – Stephen Schwarzman (chairman, CEO, co-founder).
Michael Kors – John Idol (chairman, CEO).
Versace – Jonathan Akeroyd (CEO); Donatella Versace, Santo Versace, Allegra Versace Beck (owners).