* Bali-inspired jeweller seen fetching $100-$140 mln
* Catterton, TSG among the interested parties - sources
* Jewellery outpacing broader luxury market growth
By Astrid Wendlandt and Olivia Oran
PARIS/NEW YORK, Nov 29 Jeweller John Hardy is
attracting bid interest from a string of U.S. private equity
firms, sources close to the matter said, the latest potential
deal in a sector outpacing the broader luxury industry thanks in
part to financially independent Asian women.
U.S. buyout groups Catterton Partners and TSG Consumer
Partners are among the firms interested in a jeweller which
draws its inspiration from the Indonesian island of Bali and
sells products including a $425 two-finger silver snake ring and
a $1,495 silver-and-gold dragon ring, the sources said.
While luxury watchmakers are struggling with a crackdown in
China on gift-giving to officials and several fashion and
accessories brands point to slowing growth in a range of
emerging markets, jewellers are proving more resilient.
A sector once dominated by events such as engagements and
births is now achieving a broader appeal, due partly to the
growing financial independence of women in emerging markets,
particularly Asia, and to ageing populations in mature markets.
Older people tend to spend more on jewellery than the young.
"Jewellery is the next big category behind shoes as it is
easy to wear, allows you to show your personality and is not
hugely expensive thanks to brands like David Yurman,
Alexis Bittar and Ippolita," said Elsa Berry, managing director
of Vendome Global Partners, a financial advisory firm focused on
the luxury industry, in New York.
Bernstein analysts forecast that sales of branded jewellery,
which makes up 20 percent of the total market, will grow at a
compound annual rate of 8-9 percent from 2012-17, compared with
6-7 percent growth for the luxury industry as a whole.
That has driven a pickup in acquisitions of jewellers, with
recent deals including Swatch's $750 million purchase of Harry
Winston and Gucci-owner Kering's acquisition of a
majority stake in China's Qeelin and Italy's Pomellato.
Private equity firm 3i, which owns 23 percent of
John Hardy, is keen to sell the jeweller as part of a general
winding down of its Asian operations. It is also looking to get
back a $45 million redeemable loan to John Hardy that matures in
October, the sources told Reuters on condition of anonymity.
John Hardy's enterprise value could range between $100
million and $140 million, one source said.
Chief Executive Damien Dernoncourt, who took the business
private in 2007 with backing from 3i, controls it through a
holding that includes other investors and creative director Guy
Bedarida and owns 73 percent, the sources said.
3i declined to comment. No one at John Hardy was immediately
available for comment.
Catterton owns a stake in French high-end crystal maker
Baccarat, while TSG has invested in jewellery brand Alexis
Bittar, a close rival of John Hardy with which it could generate
Other private equity firms interested in John Hardy include
TA Associates, which invested in French fashion brand Zadig &
Voltaire, and JH Partners, which recently ceded control of
underwear brand La Perla, the sources said.
Nobody at Catterton, TSG, JH Partners or TA Associates was
available for comment on Thursday, the U.S. Thanksgiving
John Hardy, a rival of jewellers in the United States such
as David Yurman, was founded in Bali in 1989 by a young Canadian
art student of the same name who was studying the region's
traditional jewellery-making techniques.
Today, the brand's products are still designed in Bali, but
the company is headquartered in Hong Kong.
A separate source said Kering and luxury industry leader
LVMH, which owns Roman jeweller Bulgari, would not be
interested in bidding for John Hardy as the brand was in the
more widely accessible segment of the market, an area in which
the two groups were not looking to invest.
LVMH and Kering declined to comment.
The New York office of investment bank Rothschild handling
the sale sent out a teaser to potential bidders two weeks ago in
which it reported John Hardy made earnings before interest, tax,
depreciation and amortisation (EBITDA) of $13 million on sales
of $75 million in the 12 months to July 30, the sources said.
For the current year to July, the firm is aiming for EBITDA
of $15 million on sales of $86 million, the sources added.
About 90 percent of John Hardy's revenue is generated in the
United States, Canada and the Caribbean, they said.
The United States is the biggest jewellery market in the
world, according to analysts from brokerage Vontobel, with a 29
percent share of the global market, followed by China with 11
percent and India with 10 percent.
An official deadline for indicative offers has not yet been
set, the sources said.