Carlyle buys Italian fashion brand

Private equity has always been drawn to fashion brands, and The Carlyle Group is no exception. Adding to its existing stable, which includes Chinese womenswear group Ellassay and Italian luxury sportswear label Moncler, the US-headquartered firm has today bought Light Force, Private Equity International can exclusively reveal.

Light Force owns womenswear brand Twin Set Simona Barbieri, a fast-growing brand targeting the “accessible luxury” segment of the market.

Twin Set's Summer 2012 collection

The Carlyle Group confirmed the deal, but declined to comment on financial terms. Market sources indicated the transaction value was in the €250 million to €300 million range, however. Carlyle has invested in the business using capital from its €5.3 billion Carlyle European Partners III fund.

The Light Force acquisition is only Carlyle's third private equity deal in Italy, after aerospace company Avio (since exited) and sportswear brand Moncler, acquired in 2008. The firm has a number of real estate investments in the country.

The deal also represents a full exit for Italian growth capital investment firm DGPA Capital, which backed the company in 2008.

Marco De Benedetti, managing director and co-head of Carlyle's European buyout team, told Private Equity International the company perfectly matched the firm's strategy of buying companies it could help to grow on a global basis.

“We target companies which have a particular strength, be it a particular product, a technology, or an offering, which has not yet been fully exploited,” De Benedetti said.

“We began a dialogue with Tiziano Sgarbi and Simona Barbieri [the two founders of Light Force] some time ago, and have maintained contact ever since. It's a seed we planted that has come to fruition with this deal. Twin Set is now one of the strongest new Italian brands, whose fresh, youthful approach and operating model mean it is able to interpret and respond to new trends in a much more flexible way than traditional fashion brands,” he said.

Marco De Benedetti, Carlyle

The Carpi-headquartered company has grown revenues by almost 400 percent since 2007 to more than €103 million last year. De Benedetti said that exceptional growth was forecast to continue.

“The objective is to take the company to the next stage,” he said. “Initially, the focus will be Europe. North America and Asia might come later.”

In order to facilitate that, Carlyle has already discussed and agreed additions to Light Force's management team. The new additions, yet to be announced, will work under chief executive Tiziano Sgarbi and creative director Simona Barbieri, who as founders retain a significant minority interest in the company.

Gearing for the transaction is modest, as De Benedetti explained. “We take a prudent approach to leverage, and in this case in particular, given its growth prospects, leverage is particularly modest.” Sources indicated the leverage used was approximately 1.5x EBITDA. A small group of mainly Italian banks comprising Intesa, Unicredit, Monte dei Paschi, BPER, and Cariparma provided the debt financing package.

Latham & Watkins provided legal advice to Carlyle on the deal, while Euromobiliare acted as financial advisor.