Blackstone acquires 20% stake in Versace

US Private-equity giant Blackstone Group yesterday made its first investment in a luxury fashion group, striking a deal to buy a minority stake worth €210 million ($287 million) in Versace, valuing the Italian fashion brand at nearly €1.1 billion ($1.4 billion).

The New York-based PE firm will buy a 20-per cent stake for $287 million through a capital injection of €150 million in cash and acquiring €60 million in shares from GIVI, a holding company controlled by the Versace family.

For its investment, Blackstone will get a seat on the Versace board.

Versace will use the funds to invest in expanding its directly operated retail store network in existing and emerging markets from 137 to over 200 in 2016 and to develop further its portfolio of brands like Versus and accessories, and enhance online commerce.

Versace, which generates 60 per cent of its revenue from its top line, is expected to post revenues of €480 million when it releases 2013 results next month and plans o increase sales to around €800 million in 2016.

After the death of her brother Gianni Versace in 1997, 58-year old Italian fashion designer and current vice-president and chief designer of the Versace Group, Donatella Versace, owns 20 per cent of the company, while her daughter Allegra owns 50 per cent.

The Versace family has been trying to raise around €150 million in order to expand and was earlier reported to have hired Goldman Sachs and Banca IMI to run an auction. (See: Blackstone close to buying 20% stake in luxury group Versace)

Versace has recovered from the financial crisis, which led to near bankruptcy in 2004.

" Versace has great brand recognition globally, unique creativity and a formidable organization which, with Blackstone's investment, we can leverage to take the Company to the next level,'' said Gian Giacomo Ferraris, CEO, who led Versace's recovery and hopes to eventually list the company.

Founded in 1978 by Gianni, Versace is one of the world's leading fashion houses. It designs, markets, and distributes luxury clothing, accessories, makeup, watches, perfumes, and home furnishings under the various brands.

Some of the celebrities who have donned Versace line of brands are Halle Berry, Lady Gaga, Madonna, Demi Moore, Britney Spears, Jennifer Lopez, Sir Elton John, and Beyoncé Knowles.

Commenting on Blackstone's investment, Donatella Versace, said, ''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.''

Giacomo Ferraris said, ''Versace has great brand recognition globally, unique creativity and a formidable organization which, with Blackstone's investment, we can leverage to take the company to the next level.''