Former Bloomingdale’s chairman and chief executive Marvin Traub has launched a private equity firm, TSM Capital, that focusses on investments in early-stage luxury brands.
TSM will target companies with revenues of between $5 million (€3.7 million) and $50 million, and seek to grow them into global brands.
“From our consulting business, we regularly saw healthy, early-stage companies that were doing well and needed to raise anywhere between $5 and $25 million,” Traub said. “But they consistently had trouble because financial markets are much more interested in companies that need $50 to $100 million.”
Singer said these young companies also suffered from a historical disconnect between Wall Street and the fashion industry.
“You have to have a feeling for this type of investment, because it’s fashion and it’s not always obvious,” Singer said.
The firm currently raises money on a deal-by-deal basis, but once the team has built a track record, the firm will likely raise a formal fund.
TSM just completed its first investment with the acquisition of a minority stake in UK fashion house Matthew Williamson. TSM bought the stake with the Aronsson Group, another firm that invests in luxury brands, for an undisclosed amount from Baugur Group.
Magnusdottir, who sat on the company’s board while at Baugur, said she believes Matthew Williamson, who is also creative director for Italian fashion house Emilio Pucci, has a brand that could work well in different markets, and therefore has the potential to build a global presence. With this goal in mind, the brand’s first US flagship store will open in New York next year, and stores in Los Angeles and Paris are slated to follow. Eventually, Magnusdottir added, the brand will develop franchises in more distant markets, including Russia, the Middle East and Southern Europe.
TSM also plans to help Matthew Williamson develop new product categories, including a line of handbags and a home décor line. The brand will also explore the option of licensing a brand of shoes.
More and more private equity firms are buying luxury fashion brands, as the sector continues to grow. European buyout firm Permira upped its stake in Italian couture house Valentino to 60.2 percent in July, and Towerbrook Capital Partners bought iconic shoemaker Jimmy Choo from Lion Capital for £185 million ($372 million; €273 million) in February. Earlier this week, Boston-based Castanea Partners bought Betsey Johnson for an undisclosed amount.