The Lanvin Group is planning to go public in a trendy financial maneuver.
Formerly known as Fosun Fashion Group, the luxury fashion company has agreed to join forces with Primavera Capital Acquisition Corp. (PCAC), a SPAC, or special purpose acquisition company, that offers an alternative to the traditional IPO, or initial public offering.
The merger will create a firm publicly traded on the New York Stock Exchange.
The Primavera merger values Lanvin at $1.5 billion, and the combined firm at $1.9 billion. Lanvin will gain Primavera’s expertise and connections in the consumer sector, and strong balance sheet that positions the newly combined company for future growth.
“In recent years, we have not only invested in prestigious heritage brands but have also created a strategic alliance of industry-leading companies as partners and co-investors in Lanvin Group. Each of these partners is uniquely qualified to help drive growth, enhance the performance of our brands and unlock the full potential of new markets,” Lanvin chairman and CEO Joann Cheng said.
“We plan to accelerate the growth of our portfolio via both organic development and disciplined acquisitions, building a global portfolio of iconic luxury fashion brands that appeal to a broad customer base,” Cheng added. “Lanvin Group will not only enable these brands to flourish in their home countries, but also in Asia and North America, the largest luxury markets in the world.”
Max Chen, CEO and CFO of PCAC and a Primavera Capital Group partner, said the company has been “looking to support an emerging leader in the consumer sector with enduring global appeal and significant growth prospects in Asia.” Lanvin Group offers a “unique global business with a rich heritage, an entrepreneurial management team, and a differentiated strategy to build a luxury powerhouse for a new generation of consumers, especially benefiting from surging luxury consumption in Asia,” he added. Both are similarly interested in “nurturing and reinvigorating world-class luxury brands.”
The transaction will give Lanvin Group shareholders a 65 percent stake in the new publicly listed entity. Shareholders include Fosun International Ltd., ITOCHU Corp., Stella International Ltd., Baozun Hong kong Investment Ltd., Golden A&A, Aspex Master Fund and Sky Venture Partners.
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The Lanvin Group will receive up to $544 million in proceeds to be used for operational improvements and growth initiatives, including future acquisitions.
Both corporate boards approved the merger. The new post-merger board will have seven directors, and Primavera will put one member on the board.
SPACs raise money through an initial public offering, and then have 18 to 24 months to find a company to buy. It’s seen as less risky in some ways than the usual path to getting publicly traded.
Fosun Fashion Group was established by Fosun International Ltd. in 2017 to capitalize on the growing demand for luxury fashion, particularly in China. The group took on the name of its French luxury fashion brand, which was founded in 1889 and is the oldest operating luxury couture fashion house in France. In addition to Lanvin, the fashion group’s portfolio includes Italian luxury shoemaker Sergio Rossi, Austrian intimates specialist Wolford, American women’s wear brand St. John Knits and Italian men’s wear maker Caruso. The five brands reach more than 60 countries through more than 1,000 points of sale, 200 retail stores and 3,500 employees.
The luxury fashion group has a strong foundation in Europe, where nearly half of its revenue is from the Europe, Middle East and Africa region. Lanvin is also has a strategic emphasis on growing the group’s untapped potential in both Asia and North America. Brands selling in Asia and North America are expected to achieve rapid and significant future growth, with Greater China now accounting for 14 percent of total group revenue in 2021 and North America contributing 33 percent of the revenue volume, or 15 percent excluding St. John Knits.
The global luxury goods market is expected to reach $430 billion by 2025, with Chinese luxury consumption set to account for nearly half of the total pot. “In the fast-growing Asian market, the group and its strategic partners have unparalleled access and track record in backing international consumer brands and powering their growth,” Lanvin said.
“In North America, the brands are also beginning to unlock the huge growth potential of the market by opening new retail stores, expanding e-commerce channels, as well as launching dedicated marketing and brand collaborations,” it added.
Lanvin has six vertically integrated production facilities in Europe and North America that manufacture luxury shoes, skinwear, knitwear, menswear and fashion jewelry. It said it “take initiatives to create business value and prioritize sustainability.” ITs ESG policy follows that of Fosun International, which recently earned an “AA” MSCI ESG rating.
The company said its portfolio brands are able to optimize their product mix, and will continue to tap into new trends including athleisure and cosmetics, and “will evolve with the emerging, younger client base with high spending power.”
The Lanvin brand’s global revenue last year improved 103 percent year-over-year, reflecting revenue growth in Great China and North America by 122 percent and 298 percent, respectively. “Global e-commerce revenue increased by 407 percent compared to 2020 and by 14 times compared to 2019,” Lanvin Group said.