1. Criteria to invest in Fashion Companies
STRATEGIC SEMINAR FOR THE ANOIA TEXTILE CLUSTER
“Searching for blue oceans”

2. Agenda
1. Camelot
2. Market outlook
3. Investment criteria
4. Case history
2

3. Speaker, Salvatore MAJORANA
Shareholder and Managing Director of Camelot since 2006, Salvatore has actively contributed to
create and establish the Made in Italy private equity boutique. While in the role, the company
finalized 6 acquisition in the luxury goods sector; developed the offices of Milan, Turin and Padua,
reaching a maximum headcount of 23 professionals. About 20 new private investors have been
involved, for an overall equity of € 12M and debt of €19M. Company performances doubled every
year.
Prior to join Camelot, Salvatore held a managerial position AT Kearney and EDS Consulting, was
senior consultant for Deloitte, Investment manager for the Italian private equity fund KIWI, and
member of the Strategic Planning division of Telecom Italia Lab.
Salvatore holds and Engineering degree cum laude from Università di Catania (Italy) and an MBA
from INSEAD (France and Singapore). He published his research work from University of California
at Berkeley. He speaks English and some French beside Italian.
38 years old, Salvatore is married with three children.
3

4. Camelot: focus on Small Medium Enterprises
Camelot is a Business Development Company, founded in 2005 with the goal of aggregating “Club
Deals” on small and mid cap firms operating in luxury goods and lifestyle sectors (Fashion, Food,
Design).
Investments are made at various stages of company development: growth financing, LBO/MBO,
turnaround, generational change.
Deal size is in the range of €5M to €15M with use of debt leverage. Aggregation of more targets is
a value creating driver for a way‐out strategy.
Camelot’s goal is to support the target companies in developing their market reach and internal
organization, eventually by creating clusters of companies in the group, in order to benefit from
the value created in a way‐out process.
4

5. Camelot and Partners Geographical Presence in Italy
Camelot has a its headquarters in Milan and several offices in the main Italian economic districts.
Local offices are developed with local minority shareholders, who contribute at creating a tight
connection with entrepreneurs and investors across Italy.
Especially in Italy, the local presence is crucial to build
relationship with SME’s.
Milano
Torino Padova The presence over the territory allows to achieve the
following competitive advantages:
More Reach: possibility to screen the investment
Roma projects before the other Private Equity firms.
Cleaner Pipeline (information filtering):
optimization of the business origination process
thanks to local partners who help select deals on
Messina
their own territory.
5

6. Gulf Finance & Investment Co.
Located in the heart of Beirut, Gulf Finance and Investment Co. (“GFIC”), is an holding company
active in the area of finance, insurance and other diversified business. Part of the group is a
Lebanese financial institution regulated by the Central Bank of Lebanon (“CBL”) under license No.
13 of the CBL list of financial institutions.
From its establishment in 1999, GFIC has been providing premium‐grade financial services with a
high level of transparency to its clients. Having a dedicated team of professionals and many
correspondent relationships with financial institutions in Europe and the United States, GFIC
prides itself at playing the role of asset manager and in‐house funding provider of choice.
GFIC offers a full array of investment banking services sought by large corporations. It is an active
player in international capital markets and provides securities and currency brokerage, portfolio
management and in‐house fund management. Retaining a large portfolio of local, regional and
international investors, GFIC enjoys a presence (affiliated offices) in both the United Kingdom and
Malta. Our clients include high net‐worth individuals, corporations and quasi‐governmental
institutions in the MENA region
6

7. The International Network
777 Brickell Ave, Suite 1150
Miami, FL (USA)
650 Fifth Avenue , 17th floor
New York, NY (USA)
Av. Carlos Gomes, 466/602
Porto Alegre (BRAZIL) Beirut Central District, Foch Str., Yanabih Street‐ Swaifia 60 Street, Malaz Area
Baydoun Bldg. P.O.Box 26332 Al‐Ikariah Al‐Kadima Bldg, Room 508
Colonos Plaza Sur Victoria Riad El‐Solh, Beirut (LEBANON) (AMMAN) (RIYADH)
Ocampo 360, 3rd floor
Buenos Aires (ARGENTINA) Kuwait Real Estate Bldg. 3rd Circle Road Al‐Swaidi Bldg, Also present in:
7th floor, Suite 717, Kuwait City 2nd floor P.O.Box 7678 UNITED ARAB EMIRATES, BAHRAIN,
AV. Vitacuran° 2939, piso 10 SAFAT, (KUWAIT) DOHA, (QATAR) SYRIA, REPUBLIC OF YEMEN
Las Condes, Santiago (CHILE) 7

8. Track record
Sutor Mantellassi (2006) ‐ www.sutormantellassi.com
Buyout and turnaround of an historical brand of top quality Italian shoe makers tradition.
Tanino Crisci (2007) ‐ www.taninocrisci.com
PRIVATE EQUITY
Buyout of an historical brand of top quality Italian shoes, with flagships shops in primary locations around the world.
iLuxe (2007) ‐ www.i‐luxemosaic.com
Start up aimed to design and distribute high quality mosaic.
Unomaglia (2008)
Buyout of a top quality jersey producer, selected by top tier fashion brands, such as Prada, Gucci, Chanel and others.
Vecellio (2008)
Acquisition of majority shares of top quality eyewear and sunglasses producer, licensee of
Zagato – www.zagato.it Villa Paradiso ‐ www.golfvillaparadiso.com
Support in identifying an equity partner to Advisory on structuring the acquisition of a
develop company business plan and golf club related to a significant luxury real
footprint. Valuation and business planning. estate development.
ADVISORY
Boscolo Hotels Cyrus Company ‐ www.cyruscompany.it
Advisory on performance improvement of the Advisory on buy‐side to gain majority of a high
group and business plan activity; quality furniture producer.
re ‐ valuation of real estate assets.
MasterCard ‐ www.mastercardadvisors.com
Dhd design hotel development Business process re‐engineering and new
Study of international business model and set product definition for leading Italian
up activities to implement business plan . commercial banks.
8

9. Agenda
1. Camelot
2. Market outlook
3. Investment criteria
4. Case history
9

10. Financial crisis and credit crunch
The financial crisis of 2007–2009 has been called the worst financial crisis since the one related to
the Great Depression by leading economists, and it contributed to the failure of key businesses,
declines in consumer wealth estimated in the trillions of U.S. dollars, substantial financial
commitments incurred by governments, and a significant decline in economic activity.
Economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner explain the credit crisis via
the implosion of the shadow banking system, which had grown to nearly equal the importance of
the traditional commercial banking sector. Without the ability to obtain investor funds in
exchange for most types of mortgage‐backed securities or asset‐backed commercial paper,
investment banks and other entities in the shadow banking system could not provide funds to
mortgage firms and other corporations. This meant that nearly one‐third of the U.S. lending
mechanism was frozen and continued to be frozen into June 2009.
10

11. Financial crisis effect on EU Sme’s
The 20 million SMEs in the EU represent 99% of businesses, and are a key driver for economic
growth, innovation, employment and social integration.
Bank lending is the largest source of external SME finance and banks take a dominant position
regarding external loan finance.
Bank loans are used for financing investments, working capital and stock financing. Bank lending
may be secured or unsecured and will depend on the credit rating of an SME. A commercial bank
may be unable to provide finance to a viable SME because of: ‐Lack of a track record; ‐Inadequate
security; ‐Breach of a threshold limit; ‐A credit rating outside an acceptable range".
Starting the second half of 2008, the "collapse" of the financial system caused a huge slow‐down,
or even recession in some Member States, forcing Governments to react by
Supporting the financial system: banks, directly, to help firms, indirectly (did it work???)
Social amortization tools, to prevent massive unemployment
11

12. Impact on Italian Sme’s
Italy: industrial production contracts at slower rates
(seasonally-adjusted index, base 2005=100)
113 4,0
The pace of the recession is slowing down. The CSD
108
(Confindustria Research Centre) estimates a recovery of 1.5% 2,0
in industrial production in April following a contraction of 103
0,0
3.2% in March. It estimates an overall contraction of 4.2% for 98
% change in economy, right hand scale
2009 – practically half the contraction of 8.5% recorded for 93 Industrial production
-2,0
2008. -4,0
88 3-term moving average (m-o-m % changes, right
hand scale)
83 -6,0
jul
jul
sep
sep
nov
nov
may
may
2007
2008
2009
mar
mar
mar
Greater utilization of the wage supplementation fund
(Italy, total authorised hours covered by the WSF in terms of Source: CSC calculations and estimates based on ISTAT data
full-time equivalent workers as % of total labour force)
2.10 The use of the wage supplementation fund is nearing the peaks
Jan.-March average
1.80 of 1993. In terms of full‐time equivalent employees, the total
1.50
March number of authorised hours covered by the fund averaged 1.21%
1.20
(annualized) of total labour force between January and March.
0.90
The peak was 1.4% in 1993 and 2.1% in 1984. In March 2009
alone it stood, however, at 1.48%. Since it refers to authorised
0.60
hours, in some cases, the indicator reports with at least one
0.30
month’s delay the effective benefit claim
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
Seasonally-adjusted data, corrected for the number of working days and
annualised.
Source: CSC calculations and estimates based on INPS and ISTAT data.
12

13. New Operating Conditions
Until early 2008, in a context of a liquid market, all private equity operators were focused on the
medium/large deals (> €20M in equity plus debt) and Camelot held a distinguished market
position, being (almost) alone in a largely unexplored market. In this context, it grew experience
working as a bridge between firms and equity.
Starting September 2008, the change in the market had a strong impact on Camelot reference
market. In fact, due to the lack of liquidity
1. many operators were urged to pursue smaller deals, and Camelot’s arena became more
crowded
2. equity investors disappeared for a few months, awaiting a clearer horizon
3. and in the meanwhile, the demand for fresh equity from SME’s grew.
In the new working environment, Camelot experience and local connection to SME’s market
In the new working environment, Camelot experience and local connection to SME’s market
is a competitive advantage on other equity operators, making the firm the ideal gateway for
is a competitive advantage on other equity operators, making the firm the ideal gateway for
national and international investors to effectively reach the target market !!!
national and international investors to effectively reach the target market !!!
13

14. Reference Market: Small and Medium Enterprises
The SME’s market in Italy consists of more than 100.000 small and medium sized companies with
more than 10 employees and turnover between 2 and 30 million euros*.
Among Italian SME’s we can find a unique patrimony of traditions and innovation, style and
technology, which represents a highly interconnected economic network, largely limited within
national or regional borders.
The main issues SME’s have to face
• Highly entrepreneurial, scarcely managerial organization: powerful in a start‐up and early
growth phase, but a potential limit to a structured growth;
• Financial support: growth is often capped by a limitation on funds and a difficult
relationship with the banking system
Italian SME’s have a strong local character and often an enormous unexpressed economic
potential. In order to identify and to reach them, a regional network and a local presence is a
powerful asset.
*Source: AIFI, KPMG, Confindustria, Ministero delle politiche economiche.
14

15. Scenario Evolution
After 12 months of contraction in GDP, Confindustria
forecasts an inversion of sign in growth indicators starting
second semester 2009 (Centro Studi Confindustria – May 2009).
Stock markets have begun growing again, anticipating real
market.
Bank interests are at an historical low level.
Liquidity has gained value while EBITDA multiples have
decreased.
We face an optimal conjuncture for Private Equity:
low prices today and a growing curve ahead!!
15

16. Global financial crisis: Opportunity or a Threat?
In the present scenario, PE operators must cope with global crisis and its effects:
MANAGE
‐ Lack of trust on the market ‐
UNDERPERFORMING Restructuring;
PORTOFOLIO
Capital increase;
INVESTORS
PE
DEVELOP
Low multiples transactions;
BIG
OPPORTUNITIES Good assets still on the market, but
with huge leverage (restructuring).
16

17. The market and relevant findings (source PEM)
In summary, 127 private equity deals were included in the study for 2008. This represent a 9%
growth in comparison to the 117 deals in 2007. Since 2000, when there were 68 closed deals, the
Italian investment market has been increasing at a compound annual growth rate (CAGR) of 8%.
Although 2008 represents a peak in investments, the year seems to have been partly impacted by
the current financial crisis.
In terms of distribution, the analysis shows also for 2008 a steady state focus on traditional
sectors such as consumer goods accounting for 23% of the operations.
Relating to the target company size (with reference to sales), some slight changes were identified
in 2008, compare to the prior year. The deals mainly concentrated on target companies with a
turnover of less than 30 ml. (40% of the sample in 2008).
17

18. 2008 Transaction in Textile and apparel industry (Source PEM)
Target company Lead Investor Invest amount Acquired Investment Sector 1 level Sector 2 level
(€mln) Stake stage
Gruppo Luigi Botto Management & n.d. 92% Turnaround Consumer goods Textile mil products manufacturing
Capitali
ITP Tessitura Natexis‐Cape Sgr 8,3 70% Buy out Consumer goods Textile mil products manufacturing
imperiali
Light Force (Twin Dgpa SGR 10,0 32% Expansion Consumer goods Textile mil products manufacturing
Set)
Pantofola d’oro Mercurio Capital n.d. n.d. Expansion Consumer goods Textile mil products manufacturing
Rpb holding IP Investimenti e 16,0 43% Expansion Consumer goods Textile mil products manufacturing
Partecipazioni
Schmid Siparex Italia n.d. 50% Buy Out Industrial products Textile mil products manufacturing
Uno Maglia Camelot 5,0 100% Buy Out Consumer goods Textile mil products manufacturing
Allegri Orlando Italy n.d. 40% Turnaround Consumer goods Apparel and other finished products
from fabrics and similar materials
Jeckerson Stirling Saqure n.d. 100% Buy Out Consumer goods Apparel and other finished products
Capital Partners from fabrics and similar materials
Kickoff (Sundek) Dgpa SGR 11,1 60% Buy Out Consumer goods Apparel and other finished products
from fabrics and similar materials
Moncler Carlyle group n.d. 89% Buy Out Consumer goods Apparel and other finished products
from fabrics and similar materials
18

19. Agenda
1. Camelot
2. Market outlook
3. Investment criteria
4. Case history
19

20. Le logiche di investimento di un operatore del PE
L’operatore di Private Equity interviene sulla base di progetti
Società imprenditoriali e di idee di business meritevoli supportate da un
target management capace ed affidabile.
La presenza di un socio con la visibilità e la forza finanziaria propri di un
operatore di Private Equity, è spesso origine di maggior forza contrattuale
nei confronti di clienti, fornitori e delle amministrazioni pubbliche.
Oltre ad un aiuto finanziario, il soggetto imprenditoriale gode anche di un
contributo di know‐how manageriale, esperienza e contatti, che
l’operatore di Private Equity mette a disposizione dell’impresa per il
raggiungimento dei suoi obiettivi di sviluppo.
L’investitore realizza in un orizzonte temporale di medio lungo termine una
Investitore plusvalenza derivante dalla valorizzazione dell’impresa oggetto
dell’investimento
20

21. Tipologie di intervento
Fase di avvio. Supporto alla nascita di una nuova iniziativa imprenditoriale, sia
Seed/
Seed/ essa ancora nella fase embrionale o nelle primissime fasi di avvio. Non si tratta
Start‐up
Start‐up solo di un mero contributo in termini di capitali, ma di un aiuto nella
definizione della formula imprenditoriale, di competenze aziendale e
manageriali.
Fase di sviluppo. Operazioni di supporto allo sviluppo di una impresa che ha
Expansion
Expansion già implementato la prima fase del suo processo di crescita ed allo stesso
Financing
Financing tempo detiene spazio per sviluppare il proprio business. Il contributo
dell’investitore nel capitale di rischio è prevalentemente di natura finanziaria
anche se non è raro un intervento consulenziale
Leveraged/
Leveraged/ Maturità. Operazioni di Management Buyout/ Leveraged Buyout:
Management
Management finanziamento di società che hanno già concluso il proprio processo di crescita,
Buyout
Buyout con flussi di cassa stabili e spazio per ricorrere al debito, al fine di favorire
l’ingresso dei dirigenti nella compagine sociale o di risolvere tipici problemi di
successione delle imprese familiari italiane.
Risanamento. Operazioni di turnaround: ingresso in imprese in crisi finanziaria
Turnaround
Turnaround determinata da errate decisioni gestionali o da fasi congiunturali del mercato.
21

22. Private equity investments in Italy
Private equity transactions in Italian fashion and luxury goods companies have grown significantly
over the past seven years mainly because of the opportunity for higher returns and lucrative
transaction multiples.
Many of the Italian fashion and luxury goods companies are "family run" businesses, often
financially weak and lacking in managerial sophistication, thereby creating fertile ground for
outside professional investors.
Investors, in turn, have been providing the significant financial resources and managerial
expertise necessary to support the growth and development of these companies. This market has
such significant potential that specialized funds have been created to operate solely in this
segment.
22

23. Our approach
Operations are carefully selected according to two main guidelines:
1.Excellence in production, brand and high quality goods & services
2.Small/medium dimensions and room to create value
1
2
23

24. Brand Equity (1/2)
One of the most valuable assets in the Made in Italy sector is the brand itself. Most Italian
companies base their strategies on the emotional and intrinsic value of their brands, as a way of
communicating “QUALITY” and “STYLE”.
Literature has proven, through many empirical research projects that there is a strong
relationship between a company’s investment in intangibles and the value of its performances.
Being able to build and manage the brand provides the firm a powerful accelerator of the
business and a multiplier of company valuation.
24

25. Brand Equity (2/2)
One of the most respected authors in this field , D.A. Aaker, believes that a brand often provides
the primary point of differentiation between the different competitive offerings and as such it can
be critical to the success of the company;
Building a strong brand is one of the most important goals of product and brand management.
Strong brands result in high revenues streams, on a short and long terms basis, therefore the
most important objective in brand management is to build brands that last for decades and in
some cases centuries and that can be leveraged in different product categories and markets.
Brand equity finds its state of mind when it creates value for the company that owns it and for the
consumer.
ONE EXAMPLE: ZAGATO Cars
25

26. ZAGATO
since 1919

27. HISTORY
Alfa Romeo 1750 (1927) Lancia Aprilia Sport (1937) Maserati Panoramica (1948) Aston Martin DB4 Z (1959)
Lancia Flaminia Sport(1965) Ferrari NART 330 (1971) Alfa Romeo SZ (1989) Lamborghini Raptor(1996)
27

28. Exclusive and limited edition cars designed in agreement with luxury car Manufactures
28

29. Criteria to invest in fashion companies – firms categories
Firms categories
Aspirational brands Brands with huge potential for growth but that have limited access to
financing.
Retailers with well‐developed customer propositions, strong retail brands
Retailers
and well‐defined target markets.
Brands with
commanding national Some brands do not lend themselves to internationalization but speak
positions powerfully in a particular market.
29

30. Aspirational Brands
Investments
Investments in "aspirational brands" insist on brands with:
High quality products High margins
Clear marketing strategy Low price sensitivity
Strong brand DNA Opportunity of product diversification
High product innovation Potential for geographic and channel expansion
30

31. Retailers
Investments
Investments in RETAILER insist on product, channel and format innovation, and on the opportunity to
change the rules of the industry.
Offering of "VALUE" (due to economies of scale), differentiating, innovative products.
Attractive and scalable format.
Shift of the contractual power towards distributors.
Leadership position with additional opportunity of concentration in the segment.
Opportunity to create barriers to entry in the distribution segment trough the occupation of free
spaces in channels.
31

32. Brands with commanding national positions
Firm categories
Investments in powerful national brands and luxury and premium products capable of
internationalization and innovation, commanding and protecting attractive margins.
there is a strong relationship between a company’s investment in intangibles and the value of its
performances;
Brand finds its state of mind when it creates value for the company that owns it and for the
consumer.
32

33. Made in Italy opportunities, from “product” to “project”
Private equity investors should be conscious of challenge when they invest in SME’s:
Key success
Challenge
factors
Company under the minimum critical mass Innovation
Family transition Quality
Market transition Differentiating
Investment barriers Design emphasis on the consumer
Retail chains more selective than in the past Strategic marketing
33

34. Criteria to invest in fashion companies – action plans
Action plans
Supporting by entering new territories, building production capacity or making strategic
Growth acquisitions;
Restructuring to pass the business from one generation to the next, enabling the departure
shareholdings
of a major shareholder or preparing it for a public listing;
Releasing equity where owners can unlock the equity they have built up over time by
exchanging a portion of shareholding for cash whilst leaving the option of
remaining a significant shareholder open;
Changing the
balance to pursue market opportunities that might otherwise be unobtainable
equity/debt because of high levels of borrowing.
34

35. Agenda
1. Camelot
2. Market outlook
3. Investment criteria
4. Case history
35

36. Unomaglia, partner of the most important luxury labels.
COMPANY PROFILE TODAY
UNOMAGLIA is a leading Italian supplier in the COMPANY Unomaglia S.r.l.
creation and production of high level clothing for
HEADQUARTER Terranova Bracciolini (Arezzo).
the most important luxury designer labels.
ACTIVITY Planning and production of lines of man and woman Headquarters
Born in 1987 as a small handicraft business, the lines for the most exclusive maisons.
experience its four founders had acquired over the PRODUCTION In base to the sketches of the clients it realizes
years led them to open a research and prototypes, samples and the production, managing
development office at the beginning of the ’90s diversified productive packets, overlapped in the time,
and the company started producing on license for very short time production and high quality of the
Italian and foreign stylists. product.
MANAGERS Bertrand Thiry, CEO selected by Camelot, Simonetta
By the end of the 90’s UNOMAGLIA specialized in Guelfi, founder and style office responsible.
the creation and production of jersey articles and
over time became one of the strategic suppliers to PEOPLE 43.
the most important international fashion houses. QUALITY The company is certified by Certitex since 2001.
Style Office
KEY NUMBERS KEY CLIENTS
2005 2006 2007 2008 2009e
Sales 6.854 6.185 6.915 6.896 8.407
Ebitda 1.160 1.227 1.571 1.055 1.231
Net
Earning 643 623 920 273 783
Shares hold by Camelot 30%
Expected value @ way‐out (2011) 3.619
Expected IRR @ way‐out 78%
36

37. Tanino Crisci, timeless style.
COMPANY PROFILE TODAY
TANINO CRISCI was founded in far 1919 from Alfonso COMPANY Tanino Crisci S.r.l.
Crisci to produce high quality shoes.
HEADQUARTER Milan.
Nowadays the shoes produced by the company are ACTIVITY the company manufactures and distributes man’s and
considered a great example of elegance an style and woman’s shoes and leather accessories with the brand
they are worn by the most important politicians, stars Tanino Crisci.
and entrepreneur in the world.
PRODUCTION The production is entirely carried out by the shoe maker
The product is distributed among an exclusive professionals of the company in the manufacturing plant
boutiques chain. The boutiques are located in the of Casteggio (Pavia).
most famous fashion street in New York, Tokyo, In this plant the whole manufacturing cycle is covered,
Milan, Paris, Florence and Rome. from the cutting to the polishing of the shoes. In the
same facility operate the main staff functions like
Moreover in Japan Tanino Crisci it is distributed by purchasing, administration, design, product
Itochu corp. a company with a great experience in development, logistic and general management.
fashion and distribution. PEOPLE 62.
Hand Made, Italian style
KEY NUMBERS FLAGSHIP STORES
2005 2006 2007 2008 NEW YORK TOKYO
Sales 5.604 6.208 6.000 7.756 795 Madison Avenue Namikidori – Ginza 8, 6, 24
Ebitda 38 (52) (50) 226 MILANO OSAKA
Via Montenapoleone, 3
Net Hilton Plaza – Umeda 1, 8, 16
Earnings (343) (362) (300) (2.616) FLORENCE
Via Tornabuoni 43/45R PARIS
40, Rue François 1er
ROME
Via Borgognona, 4
37

38. TAKE AWAYS
When to approach a PE operator?
Need money to finance growth and/or differentiation must accept to share the project!!
Tired to run your company but don’t want to waste the value created? PE is a good way
to cash.‐in
Want to restructure the shareholding composition? PE can replace your shareholders,
but remember it is a demanding partner!
Finally, if you decide to go for PE, be sure TO USE IT WELL!
They have professionals able to support your company restructuring and
reorganization;
Do not hide details, they will come out and this can be a problem. If presented upfront,
the process is faster and more efficient;
Don not assume your company is not interesting!!! PE may find scale or scope
economies that you do not imagine.
38

39. Contacts
SALVATORE MAJORANA
Managing Director
s.majorana@camelotba.com
Via Boito 8
20121 – Milan, Italy
Ph. +39 02 366 433 00
Fax. +39 02 366 433 60
www.camelotba.com