Italian private equity and debt-management group Antares is launching a new fund targeting investments among the country’s small and mid-sized financially-struggling fashion companies, whose ranks have grown with the Covid-19 pandemic.
Antares has already raised €50 million in fresh cash for its “luxury and lifestyle” turnaround fund, largely with Italian family offices and banking foundations, says Angelo Bonissoni, managing partner of the law firm and tax advisory CBA Studio Legale e Tributario, which has advised on setting up the fund and relations with regulators and investors. Antares is now in talks with lenders as it aims to take on €250 million in unlikely-to-pay loans (UTPs) issued to struggling fashion companies, bringing the targeted initial size of the fund up to €300 million.
Banks will receive a stake in the fund in exchange for the UTPs, and the disposal of the bad loans will help the lenders clean up their balance sheets. At the same time, they can also take advantage of a tax credit of roughly 24 percent for deferred tax assets on bad loans sold by December 31, 2020, a measure contained in a recent Italian government decree to soften the economic blow of the pandemic.
The fund will provide direct financing as well as investing in target companies by swapping debt for equity. Its managers boast expertise in the fashion sector and will work with management to turn around the companies before exiting with a future sale.
The operational team is led by Giovanni Mannucci, formerly chief executive of Italian menswear companies Isaia and Boglioli, and also counts on the expertise of Gaetano Sallorenza, current CEO of Miroglio Fashion and former chief executive of Calvin Klein in Europe and Asia. Antares co-founder Guido Vesin is also part of the fund’s team.
Target companies will have annual revenue of roughly €20 million to €50 million and a small but positive earnings before interest, taxes, depreciation and amortization (Ebidta) figure.
Bonissoni explains that one objective of the fund – the first to target distressed assets in the fashion sector - is to create clusters of complementary companies that can benefit from economies of scale and synergies, for example by sharing the same management team and distribution network. Antares says it also wants to play its part bolstering Italy’s key fashion sector, particularly at a time in which economic prospects have been dampened by the pandemic.