Financial News

  • 16 December 2013, 10:27

Versace: Italian Fund Steps Off 900m Catwalk

Italy's sovereign wealth fund is close to bowing out of the race to buy a stake in Versace as a trio of international private equity firms battle to invest in one of the world's best-known fashion houses.

Sky News understands that Fondo Strategico Italiano (FSI) is expected to miss out on the shortlist to acquire 20% of family-owned Versace in a deal likely to value the company at about 900m.

Blackstone and CCMP Capital, two New York-based firms, and Investcorp of Bahrain were informed on Friday that they were being considered as Versace's new investment partner.

A final round of bidding is expected before the end of the month.

The elimination of FSI, which is run by a former Merrill Lynch banker, is surprising after it was reported to have tabled the highest bid for the shareholding.

The Italian fund also has a joint venture with the Gulf state of Qatar, which last year bought the rival Italian fashion brand Valentino as well as luxury properties in Milan and Sardinia.

A person close to the Versace stake sale said it was now likely that FSI would miss out although it remained possible that it could re-enter the process.

It is unusual for some of the private equity firms left in the bidding to pursue a minority stake in a company so vigorously.

The global prestige of Versace, however, has proved to be a significant attraction. The opportunity to expand the business aggressively is said to have encouraged a belief among the bidders that its profitability can be grown rapidly.

The family, led by the largest shareholder Allegra, is understood to be open to the idea of a stock market listing in Milan in 2016 or later.

Donatella Versace, the designer behind the brand since the murder of her brother Gianni in 1997, and who owns 20% of the company, is playing a leading role in the negotiations over the stake sale.

Closely-held Italian companies such as Versace have been forced to open themselves up to external investment by the long stagnation in Italy's economy.

Versace was itself close to going under when Gian Giacomo Ferraris joined as chief executive from Jill Sander in 2009.

The private equity bidders all have experience of investing in luxury goods. One of CCMP's senior advisers, Robert Singer, is already a board member at Versace, which recorded sales of nearly 400m last year.

None of the firms shortlisted for the Versace stake would comment on the process.

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