GEREJE Corporate Finance is an independent M&A firm with an “entrepreneurial” culture providing both Strategic & Financial advisory services. Founding Managing Partner Fabrice Lombardo shares his growth plans and predictions for the luxury industry.
An Euro-Asian M&A firm founded in 2008, GEREJE Corporate Finance is an independent M&A firm with an “entrepreneurial” culture providing both Strategic & Financial advisory services to maximize equity / debt investments or placements and accelerate companies growth between Europe (Paris, Lyon & Geneva) & Asia (Singapore, Hong Kong, Bangkok). Headed by Fabrice Lombardo, GEREJE Founding Managing Partner & Chairman of the Board, the company maximises their clients’ investments strategies and accelerates their businesses’ growth in the fast growing Asian markets through tactical application of acquisitions and joint ventures in order to optimise external cross-border expansion while seeking capital funding to boost company development.
LUXUO sat down with Mr. Lombardo to discuss GEREJE’s own corporate plans and the future of the luxury industry.
What is the core business of GEREJE today?
GEREJE is and has always been focusing on how to best help large, mid and small cap firms to grow and create value!
While we optimise multinationals external growth strategy (30% of our deal flow), for mid & small cap firms we mainly raise capital both debt & equity (50%). 20% of our deals are sell mandates.
We have been awarded N2 M&A bank for Small & Mid cap in France in 2016 by Fusacq.
How is GEREJE structured today to cover clients in both Europe and Asia ?
In today’s global & fast moving world GEREJE has 2 main competitive advantages : our presence for more that 10 years with the same key team members & partners as well as our ability to always innovate for the benefit of our clients. As an example our deal flow is on line on our page investment opportunities and our NDA & contracts can now be signed electronically.
We have 2 main offices in Singapore for Asia & in Paris for Europe, with 2 rep offices in Europe (Geneva & more recently Lyon) as well as 2 other rep offices in Asia (Bangkok & Hong Kong).
In Singapore we are proud of our strategic partnership with RHT Strategic Advisory Pte Ltd Singapore. RHT Group is a leading Asia based group offering unique strategic capital advisory, and legal expertise respectively in full synergy with GEREJE skills.
What have been the latest M&A trends between Europe and Asia ?
As a matter of fact we have an increasing demand from both the Europeans willing to invest in Asia but also Asian firms looking at the European assets, especially technologies and brands.
The growing appetite of Asian investors for western brands are synergistic with the critical need for European luxury brands to enter Asia since Asian consumers are still the world’s biggest spenders.
GEEJE is ideally positioned in between!
There are already existing luxury giants (LVMH, Keering, Richemont, Swatch Group, etc.). What do you predict will happen to independent European luxury brands within the next 5 years?
In a recent presentation at the Cercle du Luxe in Paris we have demonstrated that despite many acquisitions the EBIT of the leading Luxury groups is still mainly generated from their core original brands (LV weights 50% of the group EBIT and GUCCI 65%!).
This is one of the reason why the independent brands will always be attractive!
Independent firms also benefit on the fact that the good will in terms of valuation is still higher in the luxury industry. Our recent analysis shows a strong correlation between the EBITDA multiple and the sales growth, being a very strong driver of value creation!
Do you view the emergence of Asian-born luxury brands as a reality or still a far-away perspective?
The emergence of Asian born luxury brands is and has always been a reality with world famous firms such as Kenzo, Shiseido, Qeelin Jewellery (acquired by Keering), Shanghai Tang (acquired by Richemont)….
We see many new Asian-Born brands becoming serious rivals of their western peers since Asian consumers are more & more sophisticated and interested in local designers with their unique style & point of views.
How do you view the digitisation of the Luxury industry and do you see Asia as an attractive place for new digital venture business ?
A majority of the Asian consumers are young, around 35, keen on small, cool, original brands that will make them stand out and look different form their parents!
They are also more & more internet-savvy and we see the rapid emergence of digital venture firms in direct and indirect connection to the Luxury & lifestyle industry.
Within the last 3 years a majority of GEREJE portfolio turned to digital, On line search for brands, digital media, on line sales …
These explain why venture capital funding is continuing to pour [AA1] into Asia, with 130% annual rise in 2017.
Leading the charge are China’s big tech giants, who have taken the baton from the more traditional venture capital firms. Tencent outranked Sequoia as the top investor, with 19 unicorns to the venture capital firm’s 13. Almost half China’s 46 unicorns were backed by one of the members of China’s BAT tech trinity — Baidu, Alibaba and Tencent — or ecommerce site JD.com.
How is France today attractive for Chinese / Asian investors looking at setting up their base in Europe ?
France & Europe are still very attractive to Asian investors.
Recently Chinese companies have made a series of acquisitions in the luxury sector.
Chinese Group FORTUNE Fountain Capital bought one of the most reputable iconic brand, BACCARAT, 250 year-old French Luxury crystal maker for roughly EUR164M, marking the latest acquisition in a spree of deal making by Asian groups.
Shanghai-listed Gangtai Group bought Milanese jewellery brand Buccellati in a deal that valued the company at USD282M.
Then Fosun bought a majority stake in French premium fashion brand IRO and textile firm Ruyi Group bought a majority stake in France’s SMCP Group, which owns the Sandro, Maje and Claudie Pierlot brands.
The sector will continue to grow, as consumer confidence returns in Europe and as Asian customers are still big spenders.
Can you share with us your latest deal in the Luxury & lifestyle sector?
Since 2015, GEREJE Corporate Finance is the M&A advisor of the modern and contemporary art galleries BEL AIR FINE ART, created by François Chabanian and his son Gregory in 2004. Together we have managed to raise more than EUR10M to accelerate the company’s growth and confirm its leadership in Europe while enabling the family to retain the control of their group.
We are obviously very proud to have been able to accompany the group for more than 2 years and to have contributed modestly to this success story! The success of the successive capital injections is mainly due François and Grégory who each time reached and sometimes outperformed the objectives communicated upstream to investors. As an M & A advisor, we are totally dependent on the ability of entrepreneurs to deliver their Business Plan especially during the so-called “immediate future” phase that corresponds to the period of negotiations with the candidates.