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LVMH fund and Lebanese investors take control of Pepe and Hackett

L Capital Asia, the Asian private equity fund of luxury brands group LVMH, and Lebanese investment firm M1 Group have acquired a majority stake in Pepe Jeans Group from Torreal SA, Artá Capital and L Capital Europe.

The group includes Pepe Jeans London, which accounts for 70% of group sales, and the Hackett brand, which accounts for the remaining 30%.

Details of the transaction have not yet been disclosed but the deal is expected to expand the group’s presence in Asia, the US and other underdeveloped markets.

Chief executive Carlos Ortega and the company’s Barcelona-based management team are expected to remain in place.

Pepe Jeans Group and other shareholders close to the management will reinvest alongside M1 Fashion, a subsidiary of M1 Group, and L Capital Asia.

The Pepe Jeans Group management team said: “Our new incoming partners bring with them a wealth of experience, knowledge and influence, particularly in markets where we envisage significant growth opportunites. We share a long term vision and a collective aspiration for the company and its brands.”

M1 Group and L Capital Asia said in a statement: “While there are multiple levers for us to bring value to the business, we believe our investment will benefit the group for further expansion globally, particularly targeting opportunities in Asia and North America.”

Torreal, Artá and L Capital Europe added: “Pepe Jeans and Hackett have experienced a strong development in the last few years and are today global brands uniquely positioned to benefit from additional expansion opportunities in new geographies.”

Pepe Jeans and Hackett were previously owned by Torreal Funds (31%), Artá Capital (16.4%), L Capital Europe (11.5%) and its managers.

Pepe Jeans Group had annual earnings before interest, taxes, depreciation and amortisation of €60m (£47.46m) in the year to March 31, 2014. Hackett’s turnover increased 10% to £170m and its pre-tax profits soared 74% from £3.9m to £6.8m in the same time period.

The group has more than 290 owned stores, 170 franchise stores and 6,000 stockists including multi-brand and department stores.

Morgan Stanley and Baker & McKenzie advised Pepe Jeans Group, while M1 Group and L Capital Asia were advised by Citi and Dechert.

L Capital Asia most recently acquired a controlling interest in Australian swimwear brand Seafolly in December, for an undisclosed amount.

M1 Group is a family-owned investment company, founded by brothers Taha and Najib Mikati, with its origins in the construction and telecom sectors. Its fashion subsidiary bought French womenswear and menswear brand Façonnable from Nordstrom Inc for $210m (£138m) in 2007 and was in discussion to acquire All Saints in 2011, but the deal collapsed after its investors developed nerves about the retail sector as a whole.

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