NEW YORK (The Deal) -- Sober-suited private equity firm Blackstone Group (BX) has reached an agreement with flamboyant fashion house Gianni Versace and its holding company GIVI Holding SpA to invest in a minority stake which values the whole company at 1 billion ($1.36 billion).
The New York firm has agreed to inject 150 million of new capital in Versace and will acquire a further 60 million of stock from GIVI Holding in exchange for a 20% stake.
The Versace family will retain control of the business, with Donatella Versace continuing as group creative director.
"We have gained a strong and unique positioning in luxury fashion," she said in a statement. Blackstone's investment "will enable us to achieve Versace's potential," she added.
Versace said the extra capital will permit it to invest in its retail store network, both in its existing markets and in new, emerging markets. Versace will also be able develop its portfolio of brands, in particular Versus Versace, as well as focusing on accessories and other products, and improving its e-commerce business.
A source familiar with the situation pointed out that Versace appeared undervalued compared with competitors such as Prada, and had a huge potential for growth. Rolling out new stores in underserved markets, including China, and internationalizing its sales network were obvious steps, the source added.
The Versace family has recognized the need for outside investment and expertise for some time, and brought in Goldman Sachs (GS) to help find a buyer for a stake in the company. Blackstone beat both Bahrain-based Investcorp and CCMP Capital Advisors to win the auction. London buyout firm Permira, which had expressed an interest, dropped out at an earlier stage.
Versace will release 2013 results at the end of March. The company said it expects to announce revenue up about 18% at nearly 480 million and Ebitda up more than 50% to at least 69 million.
A Lazard team led by Michele Marocchino and Fotis Hasiotis advised Blackstone.