Target Company Information

The Gruppo Star New Generation (Gruppo SNG), which is 70% owned by Star Capital through the Star IV – Private Equity Fund and 30% by the Marzioni family, has successfully acquired 100% of Maglificio Marta Carollo S.r.l. and 80% of Label System S.r.l. Maglificio Marta Carollo, based in Schiavon (VI), specializes in the design, production, and marketing of knitwear and accessories for leading luxury brands. The company, owned by the Cogo family, reported a turnover of €8.6 million in 2022, reflecting a 27% increase compared to the previous year.

Label System, located in Civitanova Marche (MC), focuses on producing various types of labels and specializes in unique design and production techniques for leather goods, footwear, and clothing. Marco Paniconi, the son of founder Alberto Paniconi, will retain a stake in Label System and continue to serve as President and CEO. The company achieved a revenue of approximately €5.6 million in 2022.

Industry Overview in Italy

The Italian fashion industry has long been celebrated as a hub of creativity and craftsmanship, particularly in the luxury segment. Renowned globally for its high-quality textiles and skilled artisans, Italy's fashion sector significantly contributes to the country's GDP. This industry encompasses a wide variety of clothing, shoes, and accessories, emphasizing the importance of blending innovation with traditional production methods.

In recent years, the luxury fashion market has experienced growth fueled by increasing global demand, particularly from emerging markets. Italian brands are adept at positioning themselves to meet this demand through strategic partnerships and innovative designs. This robust growth in the luxury sector has encouraged consolidation, as companies seek to enhance their competitive edge and expand their market reach.

Furthermore, the emphasis on sustainability and ethical production practices is shaping the industry, prompting brands to adjust their operational models. Companies that successfully integrate environmentally friendly practices are likely to benefit from growing consumer awareness and demand for sustainable luxury goods.

The market for clothing and accessories in Italy remains competitive, with many players striving to differentiate themselves through quality and heritage. As such, the recent acquisitions by Gruppo SNG align with broader market trends, reinforcing the potential for growth and expansion in this dynamic environment.

Rationale Behind the Deal

The acquisition of Maglificio Marta Carollo and Label System allows Gruppo SNG to strengthen its portfolio, bringing the total to six companies with an aggregated revenue of €120 million and a workforce of 550 employees. This buy-and-build strategy enables the group to incorporate specialized excellence within the Italian manufacturing sector, enhancing its service offerings to luxury brands and broadening the range of products available.

Gruppo SNG is aiming for further expansion, forecasting a revenue target of €140 million and an EBITDA of approximately €30 million by 2023. These acquisitions will not only consolidate its existing market position but also facilitate entry into new product segments, driving growth through enhanced operational capabilities.

Investor Information

Star Capital SGR is an independent asset management company specializing in private equity, overseeing two closed-end funds, including Star IV – Private Equity Fund, which has a total allocation of €140 million. The firm focuses on buy-out opportunities and growth capital investments in small and medium-sized Italian enterprises, thereby solidifying its commitment to nurturing homegrown talent and businesses.

With a strong track record of successful investments, Star Capital emphasizes strategic partnerships and sustainable growth, ensuring that its portfolio companies not only thrive but also contribute positively to the broader Italian economic landscape.

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The acquisition of Maglificio Marta Carollo and Label System by Gruppo SNG represents a strategic move that could yield considerable returns in an increasingly competitive luxury market. The integration of specialty firms known for their quality craftsmanship and innovative production techniques aligns well with current consumer trends emphasizing exclusivity and heritage.

The anticipated growth trajectory, with a target revenue of €140 million, indicates the potential for notable expansion. The importance placed on maintaining quality while scaling suggests that Gruppo SNG is well-poised to navigate the complexities of the Italian fashion landscape.

Moreover, the robust due diligence conducted by reputable firms and the ongoing discussions for further acquisitions suggest a thoughtful and meticulous approach to growth. This diligence only strengthens the investment thesis that Gruppo SNG is strategically positioning itself for market leadership.

Overall, the deal appears to be a strong investment opportunity, promising growth driven by both enhanced operational capabilities and the growing demand for Italian luxury goods on the global stage.

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