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New York based private equity firm Blackstone is taking a 20% position in Versace, the fashion house based in Milan. Blackstone have agreed to put up about US$207 million (Euros 150 million) to acquire new shares of the operating company Gianni Versace SPA, which will put fresh capital into the company’s treasury.
In addition Blackstone will spend a further approximately US$ 83 million (Euros 60 million) to buy some additional shares of Versace from the Versace family holding company, GIVI Holdings SPA.
With its total investment of US$290 million (Euros 210 million) Blackstone will have a 20% position in the company, valuing it at just over US$1.4 billion (close to Euros 1 billion). Blackstone will have the right to nominate one seat on the company’s Board of Directors while it remains a significant shareholder.
The Versace family of course remain at the heart of the business, with Allegra Versace Beck, her mother Donatella Versace and her uncle Santo Versace all playing important roles in the Company. Donatella Versace, who is Creative Director for the company, spoke for the family after the announcement saying, “I am very pleased to work with Blackstone and, in particular, with Stephen Schwarzman, whom I admire for his achievements and who shares the family’s vision for the development of Versace. We have gained a strong and unique positioning in luxury fashion, and I believe that this investment in the Company, together with our clear direction and our outstanding management team, will enable us to achieve Versace’s potential.”
Chief Executive of Versace, Gian Giacomo Ferraris, pointed out, “The strategy of the family remains one of going public at a certain point, ” adding “But before the initial public offering, we need to become stronger.”
Any IPO is the cart after the horse; first they must develop the company and increase its level of profitability that justifies a subsequent sale, prospectively at much higher prices than today’s values. Indeed that is the classic role of private equity; to step in at an earlier stage with a minority interest and then to share in the increased value later when an IPO takes place.
So that is precisely what Stephen Schwarzman has done. The Versace family – which controls the fashion house and international brand, which the larger than life Gianni Versace established himself in the 1970’s, have sold this minority stake to grow its online business, expand sales to the newly rich in emerging markets, improve its network of upscale retail locations and increase the range of products for sale, all with more and more luxury accessories added to the fashion range itself.
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Mr. Stephen (Steve) Schwarzman, Chairman, CEO and Co-founder of Blackstone, said: “It is a great pleasure to be working with a true icon in Donatella Versace. She has a unique position in the fashion world and has helped make Versace one of the few global, luxury fashion brands. We are delighted to be involved with this exceptional business, and are committed to helping Versace realize its strong growth potential around the world. We look forward to helping Donatella and the management achieve their goals.”
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