Blackstone, CCMP Capital, And Investcorp Want A Piece Of Versace At $1.5B Valuation

After leading the charge to buy a minority stake in luxury brand Versace, Italy's state-owned private equity fund seems to have lost out to a trio including Blackstone, CCMP Capital, and Bahrain's Investcorp.  While negotiations remain ongoing, the deal would include a 20% stake in the luxury retailer, valuing Versace at about $1.5 billion, according to Sky News.  A big deal for a minority stake in Versace would confirm the ferocious investor appetite for luxury names, with Moncler's stock market debut on Monday taking shares in the coat maker up 47%, delivering a windfall to founder Remo Ruffini and private equity backers Eurazeo Eurazeo and Carlyle Group.

Considered the front-runner in the negotiations only two weeks ago, Fondo Strategico Italiano (FSI) appears to have been relegated from a short list to acquire a 20% stake in one of the world's most iconic luxury fashion brands: Versace.  Instead, two New York firms, Blackstone and CCMP Capital, along with Bahrain's Investcorp could be nearing a deal with Donatella, sister of murdered founder Gianni Versace and the label's head designer, who is said to be leading negotiations.  While FSI seems to have lost out, a new round of bidding is expected before the end of the year.

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Appetite for luxury has been sky high, and this could mean a lot of money for private equity.  As my colleague Nathan Vardi reported, Monday saw the stock market debut of coat maker Moncler, which saw its stock surge nearly 50%, giving the company a valuation of more than $5 billion by the end of the trading session.  Paris-based PE firm and Eurazeo and the Carlyle Group raised more than $1 billion selling shares in the IPO.

And Moncler is not alone.  Since going public in late 2011, shares in Michael Kors have gone through the roof, rising 240%.  This year, the stock is up 60% as investors continue to bet on the brand's growth in the high-end market.  Michael Kors himself has become a very wealthy man due to the success of his company's stock, worth approximately $950 million given the shares he's sold and the additional options he holds, as Forbes' Brian Solomon explained.

If the Versaces secure a deal at a £900 million ($1.466 billion) valuation, as Sky News reported, they could be well on their path to billionaire status.  The company's biggest shareholder is Allegra, Gianni's niece, with a 50% stake, would see her net worth approximate $600 million after discounting 20% for potential dilution and continued investments in growing of the brand.  Gianni's brother Santo, sitting on a 30% stake, would be worth about $352 million, while Donatella's 20% position would have a value of about $234 million.

If the company continues on its current growth trajectory, last year they saw revenues jump 20% to $552.8 million, then a possible IPO could very well make the Versace billionaires over the next few years.  Regardless, what is clear at this juncture is that since the financial crisis, investor appetite for anything luxury, from fashion to real estate, remains unwavering.  And with that, private equity firms have the chance to make a killing.