Investcorp buys Italian luxury tailor Corneliani

By Pamela Barbaglia and Giulia Segreti

MILAN (Reuters) - Gulf investment firm Investcorp (INVB.BH) has bought a majority stake in Italian menswear company Corneliani in a deal that values the group at $100 million (67.87 million pound), it said on Tuesday.

It is the latest such acquisition by a foreign buyer in a sector targeted by investors seeking returns from well-established niche brands.

The Bahrain-based private equity fund will invest "a substantial amount" in the suitmaker, the group's Head of Corporate Investment in Europe Hazem Ben-Gacem told a press conference in Milan.

He hoped for a future market listing but said Corneliani "needs to walk before it can run".

The Mantua-based company posted revenues of 120 million euros ($147 million) in 2015, with almost 80 per cent of its sales coming from outside Italy.

Investcorp targets raising Corneliani's sales to more than $200 million over the next five to six years, with a focus on North America, Ben-Gacem said.

Menswear has been growing steadily in recent years and top-end brands are still faring well despite an overall slowdown in the luxury sector, facing weaker consumer demand in China and in emerging markets and security threats curbing tourism.

Chairman and Chief Executive Carlalberto Corneliani, 84, will cash out alongside his two sons, while his nephews Cristiano and Corrado will retain a minority stake.

Carlalberto, who founded the business in 1958 with his late brother Claudio, said the company had no debts and had sealed the accord for strategic reasons, without elaborating further.

"Corneliani has been like a lover, which has given me joys and griefs, but overall a splendid life," he said.

Many family-owned companies in Italy face succession problems when founders near retirement because owners are often reluctant to bring in outsiders as investors or managers.

Corrado Corneliani said the deal, sealed after almost a year of exclusive talks with Investcorp, would give the group funds for expansion.

Corneliani, which employs 1,100 people, is present in 68 countries though it has only 10 directly-owned shops. It sells its clothes mostly through multi-brand shops but it also runs corners in department stores such as Harvey Nichols and Saks Fifth Avenue.

The deal shows that Investcorp still sees Italy as a core market after it purchased Italian sportswear and protective gear maker Dainese from its founders in 2014.

Back in 1993 Investcorp bought half of Florence-based Gucci, now fully controlled by luxury conglomerate Kering (PRTP.PA).

(Editing by Ruth Pitchford)