10 Feb 2012
In mid-January, Kelso Place Asset Management, LLP, purchased a majority stake in the Nicole Farhi designer brand. Kelso Place is already well known within the fashion industry through prior ownership of the Smythson brand and current part-ownership of the Anya Hindmarch label. In a press release circulated shortly after the purchase, Kelso Place stated it intended to provide financial, strategic and hands-on operational support to ensure further growth of the business.
Kelso Place Asset Management is a UK-based equity fund management company that has been in business since 2000. It specialises in locating and purchasing UK-based businesses that are experiencing financial, strategic or operational challenges, but which have outstanding long-term potential. It then provides the necessary support for to enable them to overcome these problems and ultimately prosper. Co-founder Sion Kearsey remains at the helm of Kelso Place and his experience as a managing director at Goldman Sachs brings a wide range of investment and management expertise to bear on such acquisitions.
Kelso Place’s stake in Nicole Farhi was purchased from OpenGate Capital, which acquired the fashion house in March 2010 for a reported £5m. Hogan Lovells, acting as an advisor to the Kelso Place team, along with City private equity partner, Amit Nayyar, facilitated the transfer of the Farhi company. Mark Hughes, a partner with law firm Browne Jacobsen, led the OpenGate team.
When Kelso Place makes an investment in a company, either wholly as a shareholder, the investment team has already identified both short-term issues as well as longer-term opportunities. Kelso Place then works to incentivise that company’s employees and management team, re-align its performance with by implementing new strategies and increasing profit-making potential. Their prior experience with other brands in the luxury fashion sector makes this a logical next-step and brings a considerable degree of executive experience to bear on the Nicole Farhi brand name.
Both Nicole Farhi, who founded the label and Niki Scordi, will remain in their roles as creative director and chief executive, respectively. The brand is looking to focus on expansion into the Asian fashion market and Kelso Place sees this as an excellent opportunity for investment returns. With the Farhi brand being well established in the UK and other European countries, Asia is seen as a prime opportunity for increasing its global presence, in addition to bringing the Farhi brand back to profitability.
The brand has lost money over the past few years, as it attempted to broaden its distribution base, arguably a little too widely and too rapidly. Kelso Place appears set to focus the brand on high-end products with the best marketability, including penetration into the Asian markets and moving from a wholesale presence in the United States to a standalone store in New York. Control over both wholesale and retail sales in this gateway market is one aspect of the overall profitability and expansion plan.
With a 30-year history in the fashion industry, the Nicole Farhi brand, with the assistance of Kelso Place Asset Management, will focus on expanding the reach of its core products and improving profitability.