MEXICO. Advent International, the lead shareholder in Swiss travel retailer Dufry, today announced it has led the leveraged acquisition of Controladora Milano, Mexico’s largest discount clothing retailer, for US$200 million.
The buyout, funded with US$110 million in equity and US$90 million in debt, is Mexico’s first private-equity-backed transaction in the middle market to use significant leverage based mainly on cash flow, Advent said.
Since the banking crisis in the mid-1990s, the country’s mergers & acquisitions market has been characterised by either smaller, all-stock transactions involving financial buyers or large acquisitions by major corporations using debt secured with assets. “Milano marks the beginning of a growing trend of private equity firms using cash-flow-based debt to buy mid-sized companies,” Advent said.
Advent arranged a syndicate of investors to acquire 100% of Milano from an investor group led by Newbridge Latin America.
Founded over 70 years ago, Milano has a long tradition of selling apparel to Mexico’s low- to middle-income segments. Initially focused on men’s clothing, the company has broadened its offering over the past several years to include affordable, quality apparel for the whole family. The business enjoys exceptionally strong brand awareness and is considered an icon in the industry, Advent said.
Today Milano is the undisputed leader in the Mexican discount clothing market, with 257 stores in 120 cities nationwide. The company has a 10-year track record of growth and profitability and ended 2005 with approximately US $260 million in sales, making it significantly larger than its nearest competitors.
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Fat Face acquired by Advent International – 03/05/05
Dufry’s lead shareholder Advent International finalises €2.5 billion buyout fund – 26/04/05
