Balmain CEO Confirms Acquisition By Qatar’s Mayhoola

Balmain Olivier Rousteing
Balmain creative director Olivier Rousteing.
REX Shutterstock.

PARIS – Olivier Rousteing’s showy, hyper-expensive designs and rabid social media following have helped score Balmain a deep-pocketed and ambitious new owner.

Balmain chief executive Emmanuel Diemoz told WWD exclusively that Mayhoola for Investments, the Qatar-based parent of Valentino and Pal Zileri, has acquired a majority stake in the Paris fashion house, which has been charting rapid growth from a small base.

Financial terms were not disclosed, and Diemoz declined to say if management participated in the transaction and sold their stakes. The deal is expected to close later this summer.

This confirms a report on Tuesday, and it sets the stage for Balmain to ramp up its development.

“In recent years, Balmain’s trajectory has been more than impressive,” a Mayhoola representative said in a statement. “Under the leadership of Emmanuel Diemoz and creative direction of Olivier Rousteing, the historic house speaks to a new, younger and more savvy consumer, while never forgetting its heritage or the importance of true Parisian craftsmanship. The house’s remarkable growth and many accomplishments in recent years have reinforced the brand’s potential to become a true global luxury goods leader. By backing the current management and design team, we aim to ensure that Balmain achieves its full potential. We believe Balmain will contribute significantly to our ambition to build a global luxury goods powerhouse.”

In an exclusive interview Wednesday at Balmain headquarters on Rue Francois 1er, Diemoz said that the company would push into accessories, which currently represent only 4 percent of the business, and expand its retail footprint with more boutiques.

Kim Kardashian Kanye West Balmain Met Gala Party Kim Kardashian West, Kanye West, Kris Jenner and Olivier Rousteing. REX Shutterstock.

Immediate priorities for the latter include Los Angeles, Singapore and a third Hong Kong location in Central.

Balmain has 17 directly owned stores, concentrated in China as well as in Tokyo, Seoul, Hong Kong and Dubai.

“There’s really a huge potential,” he told WWD. “If we speak only of ready-to-wear, the network could be 30 shops, roughly one flagship in each major city. That may change with the development of accessories.”

While it has demonstrated traction with women’s footwear, the company has also yet to make serious inroads with leather goods, a cash-cow category for most of Europe’s luxury fashion houses.

Diemoz noted Rousteing, who is slated to show Balmain’s spring 2017 men’s collection on Saturday, plans to introduce an expanded range of footwear next year.

Question marks about Balmain’s future ownership have hung over the house since December 2014 when Alain Hivelin, the company’s majority owner and the architect of its recent global expansion, died at age 71. Majority ownership passed to a family holding company. It is understood Hivelin’s principal heirs, his wife and three daughters, were not involved in the fashion business.

Besides Diemoz, other members of Balmain’s management board who own stakes include Jean-François Dehecq, chairman.

Last February, the company gave a mandate to explore a sale of the company to Bucéphale Finance, a boutique mergers and investment firm in Paris founded by Jean Marc Forneri, who is also a director and shareholder of Balmain SA.

“The interest around Balmain was really huge,” Diemoz said, describing interest from industry players, private equity funds and family offices, while declining to identify them.

Sources suggested Spanish fashion and beauty firm Puig and private equity fund Eurazeo were among those that looked at the dossier, along with unidentified American and Chinese contenders.

“When you sell a house like Balmain, you want to preserve its DNA and its history so you try and find the best one to satisfy the shareholders and satisfy the management and the teams,” Diemoz said. “As soon as Mayhoola came to us, it was obvious for us that they were the best choice for the brand, and so we decided to move forward with them. They have a long-term vision. They are very supportive of the management and they share our vision for the future.”

It is understood the brand achieved a high valuation, reflecting its rarity, growth potential, and sound financing.

“Balmain is one of the last independent French brands in fashion. It has a long history and a long heritage since 1945,” Diemoz said. “But at the same time, it’s a very young brand that is very visible and vibrant. In this very difficult period, Olivier delivers collections that are very optimistic. There is a lot of energy. This shows another face of luxury.”

The company posted revenues last year of 121.5 million euros, or $134.8 million at average exchange rates, and achieved earnings before interest, taxes, depreciation and amortization of 33 million euros, or $36.6 million.

Asked to account for Balmain’s strong profitability selling mostly ready to wear, Diemoz cited nimble management, transparency between different business units – and a designer who keeps a close eye on the top and bottom lines.

“Olivier is really paying attention to the results, and he is really driven to keep revenues growing,” he said. “He’s really committed to the brand, to the house, and that’s a big part of it.”

The 30-year-old, whose tight clutch of celebrity friends include the Kardashian clan and a gaggle of top models, has amassed 3.4 million Instagram followers, and he maintains a high profile in the media.

The company has been tracking an average of 25 percent sales growth the last three years. Diemoz forecast gains of between 15 and 20 percent this year, given the muted environment for luxury and fashion worldwide.

Europe accounts for 50 percent of Balmain’s business, Asia 25 percent and the rest of the world 7 percent.

Diemoz noted he spies potential to expand the rtw business in the U.S., noting its Manhattan flagship, which opened last April, is operating 50 percent ahead of plan. Americans are the No. 1 clientele on Balmain’s online store, introduced in 2009.

Qatari investors continue to actively build their fashion, retail and real estate portfolios in Europe.

Mayhoola, said to be controlled by Qatar’s royal family, bought the Valentino fashion house in July 2012 and is a minority shareholder in the Anya Hindmarch accessories brand. In 2014, it added a majority stake in Forall Confezioni SpA, which produces Pal Zileri and also holds licenses for Moschino and Cerruti 1881.

The investment fund’s deal to buy Balmain comes a day after another Middle Eastern investor, Investcorp, took a majority stake in storied Italian men’s wear brand Corneliani.

Pierre Balmain founded his Paris house in 1945 after design stints at Molyneux and Lucien Lelong, and became known for wearable, elegant clothes: safe and classic for day; extravagant for evening.

Laurent Mercier was its last couturier, though most remember a longer, more heralded stint by the late Oscar de la Renta. Subsequent designers, notably Christophe Decarnin, heated up the house with more audacious and racy styles, including strong-shouldered jackets, motorcycle jeans and heavily embellished minidresses. Rousteing has continued in that vein, winning fans around the world while not always receiving plaudits from fashion critics.

The term “Balmainia” was coined last November, when H&M conscripted Rousteing for its annual holiday designer collaboration. Shoppers hoovered up the merchandise in minutes, with sources describing the tie-up as the Swedish fashion giant’s most successful to day.

The company recently introduced kid’s wear, and has licenses with L’Amy for eyewear and Inter Parfums for beauty.