US private equity firm KKR plans to sell SMCP to China’s Shandong Ruyi in a deal that values the French fashion group at ￠1.3bn including debt, according to people familiar with the matter.
The owner of the Sandro and Claudie Pierlot brands would become the latest European luxury target to fall into Chinese hands under an arrangement that would see the textile manufacturer buy KKR’s majority stake in SMCP.
The deal, expected to be announced today, would mark an abrupt reversal of plans for KKR. It said this month that it planned to list SMCP on the Paris stock exchange as early as this summer.
KKR declined to comment. The New York-based private equity group bought 65 per cent of SMCP three years ago from L Capital, the private-equity investing arm of French luxury group LVMH, and Florac, another buyout group, in a deal that valued SMCP at about ￠650m including debt.
The deal is the latest international foray by Shandong Ruyi, which in 2012 led an international consortium to buy Cubbie Station, an Australian cotton farm, for $232m. It had been in talks with SMCP before the flotation plans.
SMCP has enjoyed rapid growth in recent years as its labels tapped in to the accessible luxury market.
The group now has more than 1,100 stores worldwide including a recent expansion into Hong Kong and mainland China to cater to the region’s fast-growing middle classes.
The group was founded by Evelyne Chétrite and Judit Milgrom, two sisters. Ms Chétrite began Sandro, which dresses young executives, in the late 1980s. Mrs Milgrom founded Maje, which targets urban teenagers. The two acquired Claudie Pierlot in 2009.
According to the registration statement SMCP filed ahead of its planned IPO, the two founders own a little more than 21 per cent of the group, and 14.6 per cent of the voting rights. KKR owns 69.8 per cent, and 78.8 per cent of voting rights.
Group earnings before interest, taxes, depreciation and amortisation (ebitda) last year were ￠107m, 44 per cent up on a year earlier. Revenues were ￠675m, 33 per cent more than in 2014.
Daniel Lalonde, SMCP’s chief executive, said at the time of the IPO registration filing that the listing would include a capital increase of ￠150m — ￠175m. He also said that the money raised would help reduce its ￠290m debt.
The prior negotiations between KKR and Shandong Ruyi reportedly broke down over the price but also over the amount that the founding sisters would be prepared to sell of their stake. The people familiar with this week’s planned sale announcement said it will see the sisters retain a stake in the group.