“With the backing of the Permira funds, Hugo Boss was transformed from a wholesale supplier into a fast-growing branded retailer,” Permira managing partner Jorg Rockenhauser said in a statement.
In fact, the German fashion label has proved to be one of the most rewarding – if not the most – investments of the private equity firm, which has netted its backers 2.5 billion euros by selling out their shares in the company.
As highlighted by the ‘Chicago Tribune’, including the proceeds from the 2012 sale of Valentino Fashion Group, Permira's clients will receive more than 2.3 times their total 1.1 billion-euro investment, said Martin Weckwerth, a partner at the London-based firm.
Market sources meanwhile stress the fact that, in absolute terms, Hugo Boss is the biggest return from any investment in Permira's fourth fund, a 9.6 billion-euro pool raised in 2008, so far. The transaction has helped the fund, which saw its valuation dissolve to 39 percent of the backers' original commitments in 2008, return to profit. Recalled a spokesperson for Permira.
The sale marks a turnaround for an investment that Permira had written down by as much as two-thirds as consumer spending dried up during the financial crisis. Permira even had to step in to buy some of the firms' debt as it plunged to 38 percent of face value, recalls Bloomberg.
Permira, which inherited Hugo Boss in 2007 as part of a 5.3 billion-euro purchase of Valentino Group, was originally “70 percent wholesale, 30 percent retail and the company had around 200 stores," as per Weckwerth’s commentary.
"Now its 55 percent retail and the company operates more than 1,000 stores. It reflects the strategic story of shifting what was originally a branded manufacturer towards today a customer focused branded retailer," concludes the Permira’s partner
Permira placed about 8.4 million Hugo Boss AG shares at 113.0 euros per share.