There’s a new brand management firm in town, and it has just made Anne Klein its first brand aquisition.
WHP Global is the new platform affiliated with Wave Hill Partners, an advisory practice headed by Yehuda Shmidman. Shmidman has done some consulting work with Toys ‘R’ Us, where he is also vice chairman. He now also holds the chairman and chief executive officer hats for WHP.
According to Shmidman, WHP is backed by a $200 million equity commitment from funds managed by Oaktree Capital Management. The plan is to deploy up to $1 billion in capital over the next five years on acquisitions of brands across a range of consumer categories, although fashion is likely to be a key concentration. As Shmidman readily admits, “I love fashion.”
Shmidman has worked at fashion firms such as Iconix Brand Group Inc. and was the former chief executive officer of Sequential Brands Group, both of which are also in the brand management arena. These are firms that buy the intellectual property assets of brands, and then manage the growth of the brands through licensing partners for different merchandise categories.
In addition to Iconix and Sequential, the other leading publicly-held brand management firm is Xcel Brands. On the privately-held side are Authentic Brands Group and Marquee Brands. And so far all are based in New York. With a number of similar firms operating in the same space, it’s reasonable to wonder whether there are too many chasing the same brands to acquire.
“If you go back to a few years ago, three to five years, living through the unbelievable disruption in the industry…one of the byproducts of that disruption is the number of strong brands that now are in need of strong ownership, new development or new investment,” Shmidman said.
That’s where women’s fashion brand Anne Klein comes in.
The brand has more than $700 million in annual volume at retail. Licensing partners include Steve Madden for footwear and handbags, Kasper Group for sportswear and E. Gluck for watches. Prior to the acquisition, it was a part of Premier Brands Group, the new restructured entity that was formerly Nine West Group at the time it entered bankruptcy proceedings. Shmidman said he’s known Premier CEO Ralph Schipani for years and the two began discussions after Schipani’s firm determined that Anne Klein didn’t fit in with its new focus after the company exited bankruptcy proceedings.
Terms of the Anne Klein transaction weren’t disclosed.
Sales of Anne Klein’s footwear and sportswear are focused primarily in the U.S., although the watch distribution is across 40 countries. The latter is where Shmidman thinks he can leverage the brand recognition in watches to expand the apparel and footwear distribution into the overseas market.
Shmidman doesn’t appear to be concerned by what could be intense competition among the management firms and other financial sponsors, in their search for brands on the lookout for their next home. In fact, he’s already on the hunt for his next deal, which is expected to happen before the end of this year.
“The pipeline for brands is relatively strong, both in terms of quality of names and the quantity that’s available. Deal flow is strong,” Shmidman said.
And just because WHP is the new kid in town doesn’t mean it’s limited to smaller deals.
“We’re really not looking at smaller brands. We have the gun powder to acquire and have the appetite to acquire,” Shmidman said. “Because the quantity of deal flow is big enough, the brand management firms each can end up being successful in acquiring different brands that they can grow. It’s okay because there’s enough fish in the sea.”