Who Wants to Buy Some Versace?

The Versace family is reportedly trying to sell a minority stake in Versace S.p.A. (Milan, Italy) so that it can renovate some of its older stores and buy back some of its franchised stores around the world.

The New York Times reports that, according to executives who have been approached by the Versaces, the family-owned fashion design house is seeking to raise about $176 million in cash. About $26 million of that would be used by the family to pay off estate taxes incurred from the sale of the art collection and homes of founder Gianni Versace, who was killed in 1997.

Investment companies approached have included Texas Pacific Group (Fort Worth, Texas) and CVC Capital Partners and Doughty Hanson, both of London.

The $176 million is estimated to be worth roughly 35 to 40 percent of the company's total value, dependent on 2001 sales figures (which have not yet been released but are expected to approach $450 million). The family — siblings Donatella and Santo Versace, and Ms. Versace's daughter, Allegra Beck — appear determined to keep enough of the company to control its operations and its future. The Versaces had been contemplating an Initial Public Offering at the time of Gianni's death.

Versace has 112 stores around the world, though 89 are owned by franchisees. It recently bought back control of seven U.S. stores and a majority stake in the company that runs its Asian operations. The family feels too many of its stores have grown shabby under franchise management, among the worst possible things that can happen when they're trying to maintain their cachet in the fickle fashion world.

In the year following Gianni's death, Versace sales tumbled from a 1997 high of $560 million to $374 million in 1999 and $392 million in 2000. And, though expectations are for a significant rebound in 2001 figures, the hot luxury markets in both Europe and the U.S. have grown considerably colder this year.